The saga of FTX’s rise and fall has gripped the public for months with its mixture of corporate hubris and personal intrigue. Since the exchange collapsed in November, Mr. Bankman-Fried has become a symbol of the crypto industry’s excesses, and his trial is seen by some as a credibility test for the digital currency industry.
A run on deposits last year exposed an $8 billion hole in FTX’s accounts, which prosecutors allege stems in large part from “special privileges” that allowed Alameda to tap into FTX customer money. FTX filed for bankruptcy and Mr. Bankman-Fried was charged a month later with wire fraud, securities fraud, money laundering and related conspiracy charges. He has pleaded not guilty and faces what could amount to a life sentence if convicted.
Within weeks of FTX’s implosion, Mr. Wang, a friend of Mr. Bankman-Fried’s from high school math camp, pleaded guilty to aiding him in that conspiracy. Nishad Singh and Caroline Ellison, two other top executives in Mr. Bankman-Fried’s business empire, have also pleaded guilty and are cooperating with prosecutors.
Mr. Wang and Mr. Singh, who also programmed the code underlying FTX’s business, have admitted to creating a secret backdoor that allowed Alameda to borrow a virtually unlimited amount of money from the exchange. Prosecutors have argued that this backdoor was one of the primary engines of the scheme to pilfer customer accounts.
Mr. Bankman-Fried’s legal team has argued that FTX and Alameda had an appropriate business relationship and “were not set up to create some grand fraudulent scheme.”