FTX founder Sam Bankman-Fried has been convicted on all seven counts of fraud, conspiracy, and money laundering after a trial that lasted more than two weeks. This case, one of the most high-profile financial crime trials in recent years, concluded with the 31-year-old former cryptocurrency billionaire found guilty of various charges, each carrying different maximum prison sentences.
Bankman-Fried was found guilty of two counts of wire fraud conspiracy, two counts of wire fraud, and one count of conspiracy to commit money laundering, with each of these charges carrying a maximum sentence of 20 years in prison. Additionally, he was convicted of conspiracy to commit commodities fraud and conspiracy to commit securities fraud, each with a maximum sentence of five years.
U.S. attorney for the Southern District of New York, Damian Williams, stated, “Sam Bankman-Fried perpetrated one of the biggest frauds in American history, a multibillion-dollar scheme designed to make him the king of crypto. The cryptocurrency industry and its players may be relatively new, but this kind of fraud and corruption have a long history, and we will not tolerate it.”
Bankman-Fried, who is an MIT graduate, had consistently claimed his innocence since his arrest following the collapse of FTX, the crypto exchange he co-founded, and allegations of misusing customer funds to support his struggling hedge fund, Alameda Research, which faced an $8 billion deficit.
His attorney, Mark S. Cohen, expressed disappointment with the verdict and affirmed Bankman-Fried’s continued assertion of innocence, pledging to vigorously fight the charges.
Bankman-Fried was accused of diverting funds for purposes unrelated to FTX’s core business, including real estate purchases, political contributions, and charitable projects. FTX’s bankruptcy in November 2022 had a significant impact on the crypto industry, causing substantial losses for clients and raising questions about the stability of other major players in the field.
During the verdict reading, Bankman-Fried remained motionless, and his parents, present in the courtroom, closely observed the proceedings. This marked a dramatic downfall for a man who, according to his lawyers, believed his billion-dollar empire was solvent just a year prior.
Natalie Tien, a former FTX employee, described attending the trial as cathartic, given the confusion and financial losses she experienced when FTX collapsed. Tien remarked on Bankman-Fried’s once-high reputation in the crypto community.
U.S. Attorney Merrick Garland emphasized that this case sends a clear message to anyone attempting to conceal their criminal activities in emerging industries like cryptocurrency.
The trial featured testimonies from witnesses, including former employees of Bankman-Fried’s companies, who accused him of using FTX customer funds for various purposes, including investments and covering losses at Alameda.
While Bankman-Fried’s defense portrayed him as a math enthusiast who made poor management decisions rather than a criminal mastermind, his testimony during cross-examination, in which he claimed memory lapses over 140 times, was particularly damaging. The prosecution contended that this was indicative of deception.
The sentencing now falls to Judge Lewis Kaplan, who has the authority to rule below the statutory minimum of 110 years in light of the charges, but could potentially impose a more severe sentence if perjury is established.
The possibility of Bankman-Fried aiding the government in investigating other crypto-trading fraud cases was raised by Tien as an alternative to a lengthy jail term.
The next trial in the United States vs. Sam Bankman-Fried case is scheduled for March 11, 2024, where additional charges not presented in the current trial will be addressed. This trial marks the nearly year-long journey since FTX ceased allowing customer withdrawals, signifying the end of Bankman-Fried’s rapid ascent in the crypto industry.
