Sam Bankman-Fried's father, ex-Trump staffer among possible trial witnesses

Federal prosecutors say Bankman-Fried embezzled from customers at his FTX cryptocurrency exchange

NEW YORK (Reuters) - Sam Bankman-Fried's father and brother, as well as Donald Trump's former spokesman Anthony Scaramucci, are among possible witnesses at the cryptocurrency exchange founder's fraud trial, according to a list read by a prosecutor in court on Tuesday.

Scaramucci, Bankman-Fried's father Joseph Bankman and his brother Gabriel Bankman-Fried were on a list of potential witnesses prosecutor Danielle Sassoon read in court during jury selection at the outset of Bankman-Fried's trial in order to see if any prospective jurors knew them.

The list included both proposed prosecution and defense witnesses, and there is no guarantee that those named will testify.

The trial, which is expected to last about six weeks, comes nearly a year after FTX's collapse shocked markets and tattered Bankan-Fried's reputation. Selection of the panel of 12 jurors and six alternates is set to continue on Wednesday, followed by opening statements.

Federal prosecutors say Bankman-Fried embezzled from customers at his FTX cryptocurrency exchange since its founding in 2019 until its November 2022 bankruptcy in order to prop up his hedge fund Alameda Research, buy luxury properties and donate more than $100 million to U.S. political candidates.

Bankman-Fried has pleaded not guilty to seven counts of fraud and conspiracy. He has acknowledged inadequate risk management, but denied stealing funds. His lawyers have signaled in court papers they plan to argue that FTX's treatment of customer funds was proper, and that others at FTX and Alameda bore the bulk of the blame for their failure.

The defendant's parents - Bankman and Barbara Fried, both Stanford Law School professors - were sued last month by FTX's current management, which accused them of using company funds to enrich themselves. Lawyers for Bankman and Fried called the accusations "completely false."

Scaramucci served briefly as White House communications director during Trump's administration. His investment firm, SkyBridge Capital, once owned a stake in FTX.

U.S. District Judge Lewis Kaplan selected a pool of nearly 50 qualified jurors on Tuesday, after dismissing several who had personal or professional obligations or otherwise thought they could not be fair. That included one man who said he and his brother each lost money through cryptocurrency investments.

"It almost financially ruined him," said the man. When Kaplan asked if the man could nonetheless be fair, he responded, "I really want to believe that I could, but to be perfectly honest I believe that it would affect me."

BANKMAN-FRIED NOT OFFERED PLEA DEAL At the outset of proceedings, Kaplan told Bankman-Fried in open court that it would ultimately be his decision whether to testify in his own defense, and asked Bankman-Fried whether he understood.

"Yes," the 31-year-old former billionaire replied. He was dressed in a suit and striped tie, with his once signature curly, unkempt hair cut into a neater trim.

Prosecutor Nicolas Roos said the two sides never engaged in talks about a potential plea deal and no such offer was made to Bankman-Fried.

Three former members of Bankman-Fried's inner circle - Alameda co-chief Caroline Ellison and former FTX executives Gary Wang and Nishad Singh - reached plea deals with the U.S. Attorney's office in Manhattan and are set to testify against him.

The jury may also hear from former FTX lawyers Daniel Friedberg and Ryne Miller, former FTX chief operating officer Constance Wang, former Alameda co-chief Sam Trabucco and Ryan Salame, the former chief of FTX's Bahamian subsidiary, according to the list Sassoon read in court.

Salame last month pleaded guilty to conspiracy charges but did not agree to cooperate.

Bankman-Fried has been detained since Aug. 11, after the judge found he had likely engaged in witness tampering - including by sharing Ellison's personal writings with a reporter. Ellison and Bankman-Fried are former romantic partners.