Sam Bankman-Fried convicted of fraud and conspiracy
Federal jury convicts FTX founder Sam Bankman-Fried on seven counts of fraud and conspiracy related to the collapse of the cryptocurrency company.
The charges carry a maximum prison sentence of 110 years, according to federal prosecutors. The jury’s verdict came Thursday after a trial lasting just over a month in New York federal court. The U.S. government alleged that Bankman-Fried, 31, cheated investors and customers out of more than $10 billion through FTX and his cryptocurrency trading firm Alameda Research.
The case attracted widespread public interest – as well as attention from Hollywood. The spectacular fall of Bankman-Fried has already given rise to numerous documentaries and should largely serve as material for a future film or television series.
According to prosecutors, Bankman-Fried, known as “SBF,” perpetrated a “wide-ranging scheme…aimed at misappropriating billions of dollars of customer funds deposited with FTX” and “misleading investors and Lenders” from FTX and Alameda Research. During the trial, Bankman-Fried testified for four days, testifying that he never committed fraud and never intended to defraud FTX’s customers.
Bankman-Fried’s sentencing hearing has been set for March 28, 2024.
Following the jury’s verdict, U.S. Attorney Damian Williams of the Southern District of New York said in a statement: “Sam Bankman-Fried perpetrated one of the largest financial frauds in American history – a multi-billion dollar scheme. dollars destined to make him the king of cryptography. – but even though the cryptocurrency industry is new and players like Sam Bankman-Fried are new, this type of corruption is as old as time. This case has always been about lying, cheating and stealing, and we have no patience for that.
FTX’s collapse came after crypto news and data site CoinDesk published a November 2022 article citing what it said was an Alameda Research balance sheet showing that a large portion of its assets were in tokens issued by sister company FTX, which caused a run on FTX assets.
In December 2022, Bankman-Fried was arrested in the Bahamas and extradited to the United States, where he was released on $250 million bail, electronic monitoring and a requirement to remain at his parents’ residence in Palo Alto, California.
In the November 2 jury verdict, 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, each of ‘among them being punishable by a maximum sentence of 20 years in prison. He was also convicted of conspiracy to commit commodities fraud and conspiracy to commit securities fraud, each of which carries a maximum prison sentence of five years.
After launching FTX in 2019, Bankman-Fried was the talk of global financial circles, appearing on the cover of Forbes and Fortune and many other major media outlets. He was thought to have a net worth of over $30 billion at his peak. He was celebrated as a visionary with a thicket of scruffy body hair and a penchant for ratty T-shirts and cargo shorts as his standard uniform. Former colleagues who testified against Bankman-Fried included Caroline Ellison, his on-again, off-again girlfriend who was previously CEO of Alameda Research.
Bankman-Fried’s defense team sought to portray his client as a daring entrepreneur who made significant mistakes due to inexperience, but none of whose actions crossed the line into fraud. The jury did not believe him, given that numerous witnesses testified that Bankman-Fried was in charge and directing key events. The trial included detailed testimony from Gary Wang, co-founder of FTX and longtime friend of Bankman-Fried, about how a piece of secret digital code was integrated into FTX’s platform, allowing in Alameda to accumulate losses and exploit customer funds without it. the activity being obvious to other users.
Investors in FTX These included Endeavor’s IMG sports division, NFL quarterback Tom Brady and New England Patriots owner Robert Kraft, according to bankruptcy court documents. FTX’s major shareholders included Dan Loeb’s Third Point, Paradigm, Sequoia Capital, Thoma Bravo, Softbank, New Enterprise Associates (NEA), Temasek, Tiger Global Management, and Coinbase, a crypto exchange competitor to FTX.
Following FTX’s collapse and filing for bankruptcy, celebrity spokespeople hired by the company, including Larry David, Tom Brady, Gisele Bündchen, Shaquille O’Neal, and Stephen Curry, were named in a draft law. class action accusing FTX and “brand ambassadors” of deceptively encouraging consumers to invest in the crypto exchange.
Cynthia Littleton contributed to this story.
