The highly anticipated fraud trial of Sam Bankman-Fried, the founder of the collapsed FTX cryptocurrency exchange, began on Tuesday in the United States. This trial marks the culmination of a yearlong legal saga that emerged following the dramatic collapse of FTX, which sent shockwaves through the markets and severely damaged Bankman-Fried's reputation. The trial is expected to last about six weeks.

The selection of the jury panel, consisting of 12 jurors and six alternates, began on Wednesday, and it will be followed by the opening statements from both the prosecution and the defense. The trial has attracted significant attention due to the high-profile nature of the case and the potential consequences for Bankman-Fried.

One of the key aspects of the trial is the possibility of a "very long sentence" for Bankman-Fried if he is convicted, as stated by the judge overseeing the case. The severity of the potential sentence underscores the gravity of the charges he is facing and the significance of the trial.

Bankman-Fried has been held in jail pending his trial, following a ruling by a US court. This decision was made due to concerns about his potential flight risk and the seriousness of the charges against him.

One of the major allegations against Bankman-Fried is that he and his parents siphoned off millions of dollars from FTX. This accusation has further tarnished his reputation and added to the complex web of legal issues surrounding the case.

To better understand the context leading up to the trial, it is important to consider the timeline of key events. In 2017, Bankman-Fried left his job as a quantitative trader at Jane Street Capital and founded Alameda Research, a trading firm focused on cryptocurrency. In May 2019, he and former Google employee Gary Wang launched FTX as a new platform for trading crypto tokens and derivatives.

FTX experienced significant success and raised $420 million in venture funding in October 2021, valuing the company at $25 billion. Bankman-Fried's net worth was estimated to be $22.5 billion at the time, according to Forbes, and it rose to $26 billion by the end of the year.

The height of the cryptocurrency craze was evident during the NFL Super Bowl broadcast in February 2022, which featured numerous cryptocurrency advertisements. FTX's own spot, titled "Don't Miss Out," featured actor Larry David and portrayed his skepticism about the platform as similar to an early human doubting the importance of the wheel.

Bankman-Fried gained recognition as a "white knight" in the cryptocurrency sector during the collapse of Bitcoin and other digital assets in June and July 2022. His companies, Alameda and FTX, provided large credit facilities to crypto lenders Voyager Digital and BlockFi, respectively.

In November 2022, a leaked Alameda Research balance sheet published by CoinDesk revealed that a significant portion of its assets, around $14.6 billion, was held in FTX's own token, FTT. This revelation led to a loss in the market cap of the token and prompted rival exchange Binance to announce its intention to sell its FTT holdings.

The trial itself is a culmination of the events that unfolded since FTX and Alameda Research collapsed in November 2021. Bankman-Fried, once a billionaire, now faces serious charges of money laundering, fraud, and securities fraud. Prosecutors also allege that he used his vast empire to influence various aspects of the US political establishment, Hollywood, and Chinese officials.

Bankman-Fried's journey from being investigated by federal prosecutors and the SEC to his extradition from the Bahamas to the United States has been a whirlwind. Initially, he was allowed to live with his parents in California on bail, but this privilege was revoked in August after he was accused of witness tampering. He has been held in a Brooklyn jail since then.

The charges against Bankman-Fried are extensive, including wire fraud, securities fraud, money laundering, and conspiracy. Prosecutors also claim that he violated campaign finance laws by using stolen funds to make political donations of $100 million. If found guilty, Bankman-Fried could face over 100 years in federal prison.

Following further investigation, Bankman-Fried is now also facing a second trial in March 2024 on additional charges, including an allegation of violating the US Foreign Corrupt Practices Act by paying a $40 million bribe to Chinese officials.

FTX, the cryptocurrency exchange founded by Bankman-Fried, had a close relationship with Alameda Research, his cryptocurrency hedge fund. Prosecutors allege that FTX was primarily created to support Alameda and that Bankman-Fried diverted billions of dollars from FTX customers and used the overvalued FTT token to fund Alameda's activities.

The charges against Bankman-Fried and the collapse of FTX and Alameda have had a significant impact on the cryptocurrency industry. Both companies filed for bankruptcy in November 2022, resulting in the loss of billions of dollars in FTX customer assets.

As the trial unfolds, it will shed light on the alleged fraudulent practices and the extent of Bankman-Fried's involvement. The outcome of the trial will have far-reaching implications for the cryptocurrency industry and could serve as a landmark case in the regulation of the sector.