four key points raised in opening statements By Reuters

© Reuters. FILE PHOTO: Indicted FTX founder Sam Bankman-Fried leaves the USA Courthouse in New York Metropolis, U.S., July 26, 2023. REUTERS/Amr Alfiky/File Picture

By Jody Godoy and Luc Cohen

(Reuters) – Jurors within the trial of FTX founder Sam Bankman-Fried heard from either side for the primary time on Wednesday, receiving dueling portrayals of key occasions and gamers concerned in what prosecutors have known as a multibillion-dollar fraud that affected 1000’s of the cryptocurrency alternate’s prospects.

Bankman-Fried pleaded not responsible. Opening statements by prosecutor Thane Rehn and protection lawyer Mark Cohen made it clear that 4 factors of competition, described under, might be essential to the trial, which is predicted to last as long as six weeks.

Was Bankman-Fried a power-hungry thief or a “math nerd” startup CEO?

In his opening assertion, Rehn stated Bankman-Fried used greater than $10 billion in FTX buyer funds to amass his personal wealth, energy and affect. Rehn stated he purchased beachfront property within the Bahamas and donated to a nonprofit his brother based.

Cohen, Bankman-Fried’s lawyer, known as that depiction a “cartoon of a villain,” and stated proof would present that his consumer was truly a “math nerd who did not drink or social gathering.” Bankman-Fried, he stated, was in actuality a CEO of a startup firm that collapsed after it was confronted with an unanticipated “good storm.”

“It is not a criminal offense to be a CEO of an organization that later information for chapter,” he stated.

Did FTX collapse due to a smear job or fraud?

From Cohen’s viewpoint, FTX and Alameda Analysis – a crypto-focused hedge fund additionally managed by Bankman-Fried – had been casualties of a downturn throughout the cryptocurrency sector, which was topic to fluctuations primarily based on “many components that no person managed.”

As Bankman-Fried’s corporations sought to climate the storm, public “assaults” by the crypto press and Changpeng Zhao, the CEO of rival alternate Binance, led to a run on FTX, Cohen stated.

However Rehn stated FTX collapsed due to Bankman-Fried’s plundering of FTX buyer money. Blaming FTX’s implosion on the broader downturn in crypto quantities to “excuses,” Rehn stated.

FTX’s relationship with Alameda: nefarious or regular?

Rehn instructed jurors that Bankman-Fried stole buyer funds in two methods: by duping FTX prospects into sending cash supposed for his or her buying and selling accounts to Alameda, and thru a “secret particular privilege” embedded in FTX software program that permit Alameda make limitless withdrawals.

Cohen stated prosecutors had misconstrued cases of Alameda performing capabilities for FTX that the fledgling alternate was not but set as much as carry out itself.

He stated the software program allowed FTX to depend on Alameda as a “market maker,” which let Alameda purchase and promote crypto because the alternate sought to draw extra prospects.

Caroline Ellison: failed deputy or “entrance”?

Both sides offered totally different tales about former Alameda chief govt Caroline Ellison, who has pleaded responsible to fraud and agreed to cooperate in opposition to Bankman-Fried.

Based on prosecutors, Bankman-Fried put in Ellison, his someday romantic companion, as a “entrance” to guide Alameda in 2021.

“In actuality he was nonetheless calling the pictures at Alameda,” Rehn stated.

However Bankman-Fried’s lawyer stated that handing over the reins was regular as FTX grew and took up his time. It was simply as pure for Bankman-Fried, nonetheless Alameda’s majority proprietor, to remain concerned, he stated.

“He relied on her and he trusted her to behave because the CEO and handle the day-to-day,” he stated.

Cohen additionally stated Bankman-Fried had requested Ellison to hedge Alameda’s investments after crypto’s profitable 12 months in 2021, however that she failed to take action.