Less than a year ago, Sam Bankman-Fried was flying high. The then-30-year-old had founded the crypto exchange FTX—once valued at $32 billion—making him one of the richest people in the world and landing him on billboards and magazine covers.
His downfall has unfolded like a Shakespearean tragedy, with friends and lovers turning against each other and a once-mighty empire reduced to ashes. On Tuesday, Bankman-Fried’s first criminal trial is set to begin, with federal prosecutors accusing him of seven counts related to the collapse of FTX and the alleged misappropriation of billions of dollars worth of customer funds.
Here’s what you need to know about the trial of the decade.
What are the accusations?
In November, an article by the crypto industry publication CoinDesk revealed that Alameda Research, FTX’s trading arm, had a balance sheet overloaded with FTX’s own cryptocurrency, kicking off a series of events that sunk the empire. While FTX had pledged that it backed all customer deposits one to one, it soon became clear that FTX had been using the funds for its own purposes, with prosecutors alleging that Bankman-Fried allowed Alameda to deploy user funds for its own trades. FTX also spent money with reckless abandon, with billions going to luxury real estate, political donations, and venture investments. As a result, when customers began to try to pull their funds from FTX, the exchange was unable to honor their deposits, plunging it into bankruptcy.
While prosecutors have levied charges against Bankman-Fried ranging from campaign finance violations to bribery of a Chinese official, they agreed to separate the counts into two separate trials. The first, beginning on Tuesday, will address seven charges, ranging from money laundering to wire fraud.
As the judge overseeing the case said at a recent hearing, “The issues in this case are pretty straightforward.” Bankman-Fried committed fraud, or he didn’t.
What are the stakes?
The initial seven charges carry a cumulative sentence of over 100 years, although prosecutors who spoke with Fortune said it’s unlikely an actual sentence would be that long. Still, because Bankman-Fried decided to plead not guilty, any potential sentence will be longer than if he cooperated with prosecutors.
The scope of the crime, which involved billions of dollars of misappropriated customer funds, could also extend the sentence. Bernie Madoff, whose pyramid scheme ensnared tens of billions of dollars, was sentenced to 125 years in prison.
Bankman-Fried will also face a second trial next year to address the rest of his charges, which include allegedly bribing a Chinese official.
Why didn’t SBF take a deal?
With his inner circle turning against him and overwhelming evidence of his guilt, Bankman-Fried’s insistence on his innocence remains the multibillion-dollar question. While eleventh-hour plea deals are possible, a trial seems all but assured.
Lawyers who spoke with Fortune said that he may be hoping for a single sympathetic juror who feels that the team of prosecutors failed to meet its burden of evidence.
Perhaps the simplest explanation is that Bankman-Fried believes he messed up, but not criminally. In interviews he’s given since FTX’s collapse, Bankman-Fried has attributed the failure to accounting errors. In a series of unpublished tweets, he also seemed to shift blame to other executives.
Who’s the judge?
Judge Lewis Kaplan will be overseeing the case. A Harvard Law graduate and veteran of SDNY, Kaplan has presided over a number of high-profile cases, including writer E. Jean Carroll’s recent civil suit against former President Donald Trump.
He is known for a no-nonsense attitude—a trait already displayed in his growing exasperation with Bankman-Fried’s apparent attempts to tamper with witnesses. In August, Kaplan finally revoked Bankman-Fried’s bail agreement, remanding him to the Metropolitan Detention Center in Brooklyn, where he likely will remain throughout the trial.
What’s SBF’s defense?
The FTX founder’s lawyers have indicated in court filings they may attempt an “advice of counsel” defense, meaning they’ll argue that their client’s behavior was the result of poor guidance from previous attorneys. While Kaplan ruled the defense team won’t be able to use the argument in its opening statement, it will likely come out during the trial.
According to Renato Mariotti, a former DOJ prosecutor, such a defense is rarely successful and could allow Bankman-Fried’s former lawyers to abandon attorney-client privilege and share documents that further illuminate his guilt.
In a recent ruling, Kaplan also said that he may exclude evidence from the defense team that Bankman-Fried’s actions were consistent with other crypto companies. He wrote that there was legal support for the prosecution’s position that it “is no defense to a speeding ticket that the police did not pull over every car traveling at the same rate of speed.”
The one upside for Bankman-Fried is that prosecutors must prove his guilt beyond a reasonable doubt—a daunting task even with a mountain of evidence.
Who could testify?
Prosecutors were able to flip several members of Bankman-Fried’s inner circle, including his one-time girlfriend and the former CEO of Alameda Research, Caroline Ellison, along with two top FTX deputies, Gary Wang and Nishad Singh. All pled guilty and are expected to testify. A fourth—Ryan Salame, the former co-CEO of FTX’s Bahamian subsidiary—pleaded guilty to campaign finance violations in September but has indicated that he will invoke his Fifth Amendment right to not self-incriminate.
Whether Bankman-Fried will testify is still an open question. While it would be unusual for a defendant in his position to open himself up to cross-examination by prosecutors, Bankman-Fried has had an atypical pre-trial process, including an extended media tour while under house arrest—a decision that landed him at Brooklyn’s MDC.
Bankman-Fried’s lawyers have sought to include testimony from expert witnesses, although prosecutors successfully challenged their qualifications. The defense team likely will still seek to call them to the stand.
More details on potential DOJ witnesses, including victims of FTX, were released on Saturday.
Where’s the trial, and how long will it take?
The trial will be held at one of the most storied federal district courts in the U.S.—the Southern District of New York. The court is infamous for its restricted access, with the vast majority of reporters and attendees unable to bring any electronics into the proceedings except for a select few who regularly cover the court’s proceedings.
Prosecutors have signaled in court filings they expect the trial to last about six weeks. The first day will be jury selection, where prosecutors and defense attorneys will winnow down a larger pool down to 12 individuals through a process known as voir dire. While an initial schedule has been released, it does not yet include details on when specific witnesses will testify.