Sam Bankman-Fried: Sam Bankman-Fried never received plea offer, prosecutor says as trial kicks off

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Sam Bankman-Fried and US prosecutors never engaged in talks about a potential plea deal and no such offer was made, a prosecutor said in court on Tuesday ahead of the start of the FTX cryptocurrency exchange founder’s fraud trial.

Mark Cohen, a lawyer for Bankman-Fried, confirmed that prosecutor Nicolas Roos was correct that no plea talks were held.

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Bankman-Fried’s trial comes nearly a year after the company’s collapse shocked markets and tattered his reputation.

Federal prosecutors say the 31-year-old former billionaire embezzled from FTX customers since its founding in 2019 through its November 2022 bankruptcy in order to prop up his hedge fund Alameda Research, buy luxury properties and donate more than $100 million to U.S. political candidates.

At the outset of proceedings, U.S. District Judge Lewis Kaplan told Bankman-Fried in open court that it would ultimately be his decision whether or not to ultimately testify in his own defense, and asked Bankman-Fried whether he understood.

“Yes,” Bankman-Fried replied. He was dressed in a suit and tie, with his once signature curly, unkempt hair cut into a neater trim.

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Bankman-Fried has pleaded not guilty to seven counts of fraud and conspiracy. He has acknowledged inadequate risk management, but denied stealing funds. His lawyers have signaled in court papers they plan to argue that FTX’s treatment of customer funds were proper, and that others at FTX and Alameda bore the bulk of the blame for their failure. The first step in the trial will be selecting the 12-member jury that will ultimately weigh those competing narratives in deciding whether to convict Bankman-Fried.

Earlier, dozens of New York residents, many holding jury summonses in their hands, streamed into the courthouse in lower Manhattan ahead of jury selection. At least 100 prospective jurors gathered in a jury assembly room in the court’s lobby.

Kaplan told prosecutors and defense lawyers that he would begin jury selection by asking the pool to indicate if there was any reason they could not serve.

He is then expected to ask questions about their backgrounds and experiences in an effort to weed out any prospective jurors who may be biased.

The trial is expected to last up to six weeks. It will feature testimony from three former members of Bankman-Fried’s inner circle who have pleaded guilty to fraud charges themselves and agreed to cooperate with the Manhattan U.S. Attorney’s office.

Bankman-Fried’s lawyers have signaled they plan to challenge the credibility of those witnesses – who include former Alameda chief Caroline Ellison and former FTX executives Gary Wang and Nishad Singh – by arguing they are motivated to implicate their client to get a lower sentence, a common strategy in white collar fraud cases.

They have also laid the groundwork to argue that Bankman-Fried believed his exchange was allowed to invest customers’ deposits as long as they were ultimately able to take out their funds, and that a series of business failures – not deliberate fraud – left the exchange without enough money to meet withdrawal requests.

Bankman-Fried’s is the highest profile case U.S. prosecutors have so far brought against a former cryptocurrency executive.

His indictment last December marked a spectacular fall from grace for Bankman-Fried, who had garnered a reputation as a legitimate operator in an industry whose image was pockmarked by scams and purported get-rich-quick schemes.

Prosecutors say Bankman-Fried built that reputation on lies and bolstered it with endorsements from celebrities and star athletes.

Bankman-Fried has been detained since Aug. 11, after the judge found he had likely engaged in witness tampering – including by sharing Ellison’s personal writings with a reporter. Ellison and Bankman-Fried are former romantic partners.

He will be brought to court early on most days to allow him to prepare with his lawyers.

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