In his opening statement at Sam Bankman-Fried’s fraud trial on Wednesday, the defense lawyer representing the FTX cryptocurrency exchange founder acknowledged the risky nature of the crypto business, stating that “crypto was not for everyone.” This statement came in contrast to FTX’s previous assertion in an online post about a car race it sponsored in Miami Beach, Florida, six months prior to its collapse in November 2022.
On May 13, 2022, FTX posted on its official Twitter account, stating, “Crypto is for everyone, as should be motorsports.” The post was accompanied by a video showcasing racing cars, bartenders serving cocktails, and retired basketball star Shaquille O’Neal giving high-fives. However, during Bankman-Fried’s trial, prosecutors played FTX video advertisements for the jury, in which a narrator invited “everyone in,” as well as spots featuring NFL quarterback Tom Brady and comedian Larry David.
Bankman-Fried, who is 31 years old, has pleaded not guilty to two counts of fraud and five counts of conspiracy related to the collapse of FTX. Prosecutors alleged in their opening statements that he stole $10 billion in customer funds to purchase luxury real estate, make political donations, and cover losses at his hedge fund.
The marketing strategies employed by FTX to attract retail investors and expand the appeal of cryptocurrency, which was once considered a niche asset class, could become a significant focal point in the trial. Prosecutor Thane Rehn argued that FTX’s commercials portrayed the exchange as trustworthy, even while Bankman-Fried was allegedly embezzling deposits. Rehn further claimed that the recruitment of new customers helped FTX meet withdrawal demands from others, temporarily concealing the theft.
Mark Cohen, Bankman-Fried’s defense lawyer, contended that his client had no intention of stealing funds. Cohen described Bankman-Fried as an ambitious entrepreneur who may have overlooked crucial business functions such as risk management as FTX experienced rapid growth during the digital asset boom. Cohen addressed the jury, stating, “You will learn that crypto was not for everyone. On the one hand, it was new and exciting. But on the other hand, many uncontrollable factors could cause crypto values to fluctuate. Similarly, crypto companies themselves could rise and fall rapidly.”
Cohen also argued, “It’s not a crime to try to get Tom Brady to appear in ads for your company.” A spokesperson for Bankman-Fried did not immediately respond to a request for comment.
The video highlighting the car race event, known as FTX Off the Grid, reminisces about the prosperous times in the crypto industry before rising interest rates triggered a sell-off in tokens like bitcoin. The video showcases women in swimsuits posing on a beach with the Miami Heat basketball team mascot, as well as a crowd dancing at a concert with smoke and flashing lights.
FTX’s celebrity promoters, including O’Neal, Brady, and David, faced a lawsuit alleging their involvement in deceptive practices. The celebrities have argued for the dismissal of the lawsuit, asserting that they were not responsible for the losses suffered by FTX investors.
The trial will continue to unfold, shedding light on the alleged fraudulent activities at FTX and the role played by Bankman-Fried in the company’s collapse. The outcome of the trial will have significant implications for the cryptocurrency industry and its efforts to gain wider acceptance among retail investors.