In a turn of events that surprises absolutely nobody, Sam Bankman-Fried, the co-founder and former CEO of the crypto exchange FTX, has been found guilty of all seven criminal counts against him. The conviction comes as a result of a month-long trial in which the 31-year-old entrepreneur was charged with money laundering, conspiracy, and “one of the biggest financial frauds in American history.” The severity of the charges is evident in the potential consequences for Bankman-Fried, who now confronts the possibility of a maximum sentence of 115 years in federal prison.
This conviction comes nearly a year after his arrest in the Bahamas back in December 2022 – something that had come after the sudden collapse of FTX – and after his trial began last month. Bankman-Fried had once been a prominent figure in the cryptocurrency world – being the founder of the former second-largest crypto exchange in the world – and he was well-known for his mop of curly hair and preferring shorts and T-shirts over business attire. Now, however, he joins the likes of admitted Ponzi schemer Bernie Madoff and “Wolf of Wall Street” fraudster Jordan Belfort, who had once made headlines for being involved in major financial crimes in the US.
A federal jury, composed of twelve individuals, rendered a unanimous decision, finding Bankman-Fried guilty of all seven counts brought against him. These charges included a complex scheme to defraud customers and investors, resulting in losses exceeding $10 billion. The jury reached the verdict after over four hours of deliberations. “Sam Bankman-Fried thought that he was above the law. Today’s verdict proves he was wrong. This case should send a clear message to anyone who tries to hide their crimes behind a shiny new thing they claim no one else is smart enough to understand: the Justice Department will hold you accountable,” said Attorney General Merrick Garland.
Bankman-Fried’s legal troubles commenced when the Department of Justice initiated an investigation into his role in the precipitous collapse of FTX, which occurred in late 2022. The exchange’s downfall had far-reaching effects on cryptocurrency prices, causing a significant decline in the value of Bitcoin and other digital assets. This collapse sent shockwaves throughout the financial markets and resulted in the loss of billions of dollars belonging to investors and customers.
The case against Bankman-Fried hinged on allegations that he masterminded a vast scheme to commit fraud, misappropriating customer funds amounting to around $10 billion and cheating customers and investors alike. Prosecutors argued that he misled investors, made false promises, and used customer funds for personal gain and the benefit of his ventures, such as Alameda Research, a crypto-focused hedge fund, and moved funds to Alameda to keep it up and running. Bankman-Fried pled not guilty to the charges levied against him.
Throughout the trial, the jury heard testimony from key witnesses, including former close associates of Bankman-Fried. Notably, FTX co-founder Gary Wang, former Alameda CEO Caroline Ellison, and FTX’s former head of engineering Nishad Singh testified against him. They alleged that they had engaged in criminal activities at his behest, implicating Bankman-Fried further and aiming to secure leniency for their own sentencing.
“Sam Bankman-Fried perpetrated one of the biggest financial frauds in American history,” Damian Williams, US attorney for the Southern District of New York, said in a briefing. “The cryptocurrency industry might be new. The players like Sam Bankman-Fried, Fried might be new. But this kind of fraud, this kind of corruption, is as old as time and we have no patience for it.”
In his defense, Bankman-Fried remained adamant about his innocence throughout the trial. During his extensive testimony, he refuted claims of fraud and intentional deception. He contended that any issues within FTX and its related ventures were the result of genuine errors and not part of a deliberate scheme to defraud investors and customers. “We respect the jury’s decision. But we are very disappointed with the result,” Mark Cohen, Bankman-Fried’s defense attorney, said in a statement. “Mr. Bankman Fried maintains his innocence and will continue to vigorously fight the charges against him.”
The guilty verdict, while a significant development, does not mark the conclusion of Bankman-Fried’s legal battles. His sentencing is scheduled for March 28, 2024, and his defense team has stated that they will continue to vigorously contest the charges. Additionally, Bankman-Fried is set to face a separate trial next March, confronting additional charges, including foreign bribery and bank fraud conspiracies.
