A Timeline of the FTX Fraud Trial

The Rise and Fall of Sam Bankman-Fried: A Timeline of the FTX Fraud Trial

Sam Bankman-Fried, the founder and former CEO of the crypto exchange FTX, was once hailed as a visionary and a billionaire in the booming industry of digital assets. But his meteoric rise came to a crashing halt when he was indicted and arrested in July 2023 on charges of fraud, conspiracy, and money laundering. He was accused of stealing billions of dollars from FTX customers and defrauding lenders to FTX’s sister company, Alameda Research. After a 15-day trial that captivated the crypto world and beyond, he was found guilty on seven counts by a jury in New York on November 2, 2023. He faces up to 110 years in prison.

Here is a timeline of the key events that led to his downfall:

  • 2017: Bankman-Fried, a former Wall Street trader and MIT graduate, launches Alameda Research, a quantitative trading firm that specializes in crypto arbitrage. He claims to have made millions of dollars by exploiting price differences across various crypto platforms.
  • 2019: Bankman-Fried founds FTX, a crypto exchange that offers derivatives and futures contracts on various cryptocurrencies. He claims that FTX is the most innovative and advanced exchange in the market, with features such as leveraged tokens, prediction markets, and volatility products. He also boasts that FTX has the lowest fees, the highest liquidity, and the best security in the industry.
  • 2020: FTX becomes one of the fastest-growing and most popular crypto exchanges in the world, attracting millions of customers and billions of dollars in trading volume. Bankman-Fried also becomes one of the richest and most influential people in the crypto space, with a net worth of over $10 billion. He moves to the Bahamas, where he lives in a luxury apartment and enjoys a lavish lifestyle. He also becomes a philanthropist and a political donor, giving millions of dollars to various causes and candidates, including Joe Biden’s presidential campaign.
  • 2021: FTX faces increasing regulatory scrutiny and pressure from authorities around the world, who accuse the exchange of operating illegally, facilitating money laundering, and endangering investors. FTX is banned or restricted in several countries, including the US, the UK, Japan, and Canada. Bankman-Fried denies any wrongdoing and says that FTX complies with all applicable laws and regulations. He also says that FTX is transparent and audited by reputable firms.
  • 2022: FTX suffers a series of technical glitches, hacks, and lawsuits, which erode its reputation and customer confidence. FTX also faces fierce competition from other crypto exchanges, such as Binance, Coinbase, and Kraken, which offer similar or better products and services. FTX’s trading volume and revenue decline sharply, and its valuation drops from $18 billion to $6 billion. Bankman-Fried tries to salvage the situation by launching new initiatives, such as acquiring the naming rights to the Miami Heat’s arena, sponsoring esports teams, and creating a decentralized exchange called Serum. However, these moves fail to revive FTX’s fortunes and instead incur more costs and liabilities.
  • 2023: FTX files for bankruptcy in February, citing insolvency and liquidity issues. The bankruptcy reveals that FTX owes over $8 billion to its customers and over $4 billion to its lenders, mostly to Alameda Research. It also reveals that FTX’s customer funds were not segregated and protected, but instead commingled and used by Alameda Research for its own trading activities. FTX’s customers and lenders file lawsuits and claims against FTX and Bankman-Fried, seeking to recover their losses. Bankman-Fried is arrested in July in New York, where he was attending a crypto conference. He is indicted on 12 counts of fraud, conspiracy, and money laundering by the US Department of Justice, which accuses him of orchestrating a massive scheme to defraud FTX’s customers and lenders. He pleads not guilty and is denied bail. His trial begins in October in the US District Court for the Southern District of New York, presided by Judge Lewis Kaplan. The prosecution presents evidence and witnesses that show that Bankman-Fried was aware of and involved in the mismanagement and misuse of FTX’s customer funds, and that he lied to and deceived FTX’s customers, lenders, investors, regulators, and auditors. The defense argues that Bankman-Fried was a victim of his own success and ambition, and that he was misled and betrayed by his subordinates and associates, who were responsible for the fraud and corruption at FTX. Bankman-Fried testifies in his own defense, admitting some mistakes and oversights, but denying any criminal intent or knowledge. He says that he trusted his employees and partners, and that he always acted in the best interest of FTX and its customers. He also says that he was trying to create a better and fairer financial system with FTX, and that he was a generous and altruistic person who gave away most of his wealth to charity. The jury deliberates for about four and a half hours, and returns a verdict that finds him guilty on seven counts of fraud and conspiracy, and not guilty on five counts of fraud and conspiracy. He is convicted of stealing billions of dollars from FTX’s customers, defrauding Alameda Research’s lenders, defrauding FTX’s investors, and laundering money to cover up his crimes. He is acquitted of defrauding FTX’s auditors, defrauding FTX’s regulators, and conspiring to commit wire fraud. He faces up to 110 years in prison. His sentencing hearing is scheduled for March 28, 2024. He remains in custody while he awaits sentencing. His lawyer says that he maintains his innocence and will continue to fight the charges against him. He also faces a second trial on five additional charges that were severed from these proceedings, which is scheduled for March 2024. The US Attorney General and the US Attorney for the Southern District of New York praise the jury’s verdict, saying that it sends a clear message to anyone who tries to hide their crimes behind a shiny new thing they claim no one else is smart enough to understand: the Justice Department will hold them accountable. The crypto industry and community react with mixed emotions, some expressing relief and satisfaction, some expressing disappointment and sympathy, and some expressing indifference and skepticism. FTX’s customers and lenders await the outcome of the bankruptcy proceedings, hoping to recover some of their losses. FTX’s competitors and rivals try to distance themselves from FTX and Bankman-Fried, and to reassure their own customers and regulators. FTX’s legacy and impact on the crypto space remain uncertain and controversial.