The fraud trial of the decade–or possibly this century—gets underway on Tuesday with jury selection for Sam Bankman-Fried, who faces seven charges related to the disappearance of billions of dollars of customer money from his FTX crypto exchange. There will be plenty to unpack in the coming weeks, but the most pressing question at the outset is a simple one: Why didn't Bankman-Fried cut a deal with the Justice Department in order to reduce his potential prison time?
I recently spoke with four white-collar crime experts, including three former prosecutors, for a Fortune feature on the subject. To be clear, Bankman-Fried has only been charged with the crimes and, like anyone else, is entitled to the presumption of innocence unless a jury finds otherwise. But the experts shared my view that prosecutors have a mountain of damning evidence—including testimony from his top lieutenants at FTX—to put Bankman-Fried away for a long time.
As for why the one-time boy wonder won't cop to what he did, the white-collar crime experts offered two explanations. The first is that the scope of the FTX fraud is so enormous that Bankman-Fried concluded he would be sent away for a long time even if he did plead guilty—so why not roll the dice in court? There is some logic to this given the unpredictable nature of juries. If Bankman-Fried can convince just one of the 12 jurors to buy his "I'm a nice boy who got in over his head" schtick, he can walk.
The more likely—and interesting—explanation, though, is the second one. Namely, that Bankman-Fried really does believe he did nothing wrong and that the serious charges against him have been trumped-up by venal or dim-witted prosecutors. In this view, he just needs to use his intelligence to persuade us all that the billions spent on luxury pads, sports stadiums, and politicians were all part of a business strategy that went sour. And that his hedge fund's crooked balance sheet and all his one-time friends testifying against him are just a big misunderstanding. Or as one white-collar defense attorney put it: "The really good fraudsters believe their own bullshit."
We'll learn more about Bankman-Fried and his motives soon enough. In the meantime, if you're interested in the trial, be sure to follow Fortune Crypto closely in coming days. On Tuesday morning, Leo will have a curtain raiser on everything you need to know, while our other previews include a look at how Bankman-Fried's actions stack up against other famous frauds like Elizabeth Holmes and Bernie Madoff, and an overview of the key players. More soon.
Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts
