Sam Bankman-Fried watches as his defense lawyer Mark Cohen makes his opening remark in Bankman-Fried's fraud trial over the collapse of FTX, the bankrupt cryptocurrency exchange, at Federal Court in New York City, U.S., October 4, 2023 in this courtroom sketch. REUTERS/Jane Rosenberg
NEW YORK (Reuters) - In his opening statement at Sam Bankman-Fried's fraud trial on Wednesday, the FTX cryptocurrency exchange founder's lawyer acknowledged that his client was in a risky business, noting that "crypto was not for everyone."
But FTX had asserted the opposite in an online post about a car race it sponsored in Miami Beach, Florida, six months before its November 2022 collapse.
"Crypto is for everyone, as should be motor sports," FTX posted on May 13, 2022 on its official account on Twitter, alongside a video showing racing cars, bartenders pouring cocktails, and retired basketball star Shaquille O'Neal giving high-fives.
At Bankman-Fried's trial on Wednesday, prosecutors played for the jury FTX video advertisements in which a narrator said, "we're inviting everyone in," as well as spots featuring NFL quarterback Tom Brady and comedian Larry David.
Bankman-Fried, 31, has pleaded not guilty to two counts of fraud and five counts of conspiracy over the collapse of FTX. Prosecutors said in opening statements on Wednesday that he stole $10 billion in customer funds to buy luxury real estate, donate to U.S. political candidates and plug losses at his hedge fund.
FTX's marketing to retail investors to try to broaden the appeal of cryptocurrency, once a niche asset class, could be a key issue in the trial.
Prosecutor Thane Rehn said FTX's commercials promoted the exchange as trustworthy - even while Bankman-Fried was allegedly stealing deposits. Rehn said the recruitment of additional customers helped FTX meet demands from others to withdraw their money, masking the theft for a time.
Mark Cohen, Bankman-Fried's lawyer, said his client never intended to steal funds. His opening statement portrayed Bankman-Fried as an ambitious entrepreneur who "overlooked" key business functions like risk management as FTX grew rapidly during a boom in the values of digital assets.
"You will learn that crypto was not for everyone. On the one hand it was new and exciting," Cohen said, addressing the jury. "But on the other hand, many factors that nobody controlled could make crypto go up and down in value. So too crypto companies themselves could rise and fall very quickly."
Cohen also said, "it's not a crime to try to get Tom Brady to come on ads for your company."
A spokesman for Bankman-Fried did not immediately respond to a request for comment.
The video about the car race, dubbed FTX Off the Grid, harks back to the boom times in crypto before rising interest rates led to a sell-off in tokens like bitcoin. It shows women in swimsuits posing on a beach with a mascot for the Miami Heat basketball team and a crowd dancing at a concert featuring smoke and flashing lights.
FTX's celebrity promoters including O'Neal, Brady and David were sued over claims they engaged in deceptive practices. The celebrities have said the lawsuit should be dismissed, arguing they did not cause FTX investors' losses.
(Reporting by Luc Cohen and Jody Godoy in New York; Editing by Amy Stevens and Matthew Lewis)
