FTX fraud trial: court hears Sam Bankman-Fried used crypto exchange clients’ funds without permission to invest through his personal hedge fund

Sam Bankman-Fried, the head of a cryptocurrency exchange platform called FTX, is currently on trial for fraud. He is accused of using his clients' funds without their permission to invest in his personal hedge fund. This information was revealed by Gary Wang Zixiao, a co-founder of FTX, who is cooperating with federal prosecutors after pleading guilty to multiple counts related to the collapse of the trading platform. The trial, which began on Tuesday in New York, could last up to six weeks. Bankman-Fried, also known as 'SBF', is facing seven counts of fraud, embezzlement, and criminal conspiracy. If convicted, he could face more than 100 years in prison. According to Wang, Bankman-Fried had the software of FTX modified in 2019 to allow his hedge fund, Alameda Research, to withdraw unlimited funds from the platform. This was not disclosed to the public or investors. Wang also testified that Bankman-Fried lied to journalists and investors, claiming that Alameda was treated like any other trader on FTX and that the platform didn't use customers' money. However, prosecutors allege that the funds were used by Bankman-Fried to purchase real estate in the Bahamas. The line of credit granted to Alameda gradually increased, eventually reaching a staggering sum of 65 billion dollars. When FTX went bankrupt, 8 billion dollars in customers' funds were missing, borrowed by Alameda, which was unable to reimburse them. The trial is set to resume on Tuesday, with more testimonies expected from former employees of Alameda Research.