FTX founder Sam Bankman-Fried convicted on all seven counts in fraud and conspiracy trial
The jury deliberated for just over four hours before reaching its verdict late Thursday.
The defendant (pictured) had been charged with participating in a “wide-ranging scheme to misappropriate billions of dollars of customer funds deposited with FTX and mislead investors and lenders to FTX and to Alameda Research,” according to a press release from the U.S. attorney’s office in the Southern District of New York.
The verdict was handed down after a five-week trial that examined the collapse of what was once one of the world’s biggest crypto exchanges, as well as its sister trading company. The U.S. Department of Justice filed its charges against the 31-year-old Bankman-Fried 11 months earlier.
Bankman-Fried reportedly sat motionless at the defense table in an ill-fitting gray suit, before being made to stand and face the jury as the verdict was announced. He reportedly showed no emotion when learning that he had been found guilty on all counts.
The former chief executive officer of FTX had been charged with seven counts of fraud, conspiracy and money laundering in what federal prosecutors said amounted to one of the “biggest financial frauds in American history.”
Bankman-Fried was found guilty of using customer deposits on the FTX crypto trading platform to cover the losses of its sister company, Alameda Research, which acted as FTX’s main market maker. As a market maker, Alameda Research was available to buy and sell if other customers wanted to, sometimes taking the losing side of a trade to attract customers to the exchange. In addition, Bankman-Fried was accused of using FTX customer deposits to pay off loans, make speculative investments and buy lavish real estate.
With his conviction on all seven counts, Bankman-Fried faces a maximum sentence of 110 years in prison when he appears for sentencing on March 28, 2024.
Judge Lewis Kaplan, who oversaw the trial, said that a second trial on counts that had been severed is currently scheduled to take place on March 11, 2024. He asked the government to inform him by Feb. 1 if that trial is going to proceed.
Bankman-Fried stepped down from the CEO role at FTX in November 2022, just days after the exchange suffered a complete collapse as customers rushed to withdraw their funds from the platform. The company, once valued at more than $32 billion, declared bankruptcy after what was effectively a run on the bank, as customers panicked following a leaked document that suggested irregular financial dealings between FTX and Alameda Research.
In the early 2020s, with interest rates at close to zero and millions of small investors stuck at home, FTX’s popularity soared, and by 2022 it had become one of the best-known names in the crypto industry, airing Super Bowl ads, while Bankman-Fried spent millions of dollars on political donations.
During the monthlong trial at Manhattan’s federal court, the prosecution accused Bankman-Fried of perpetrating an elaborate and international fraud. The defense sought to deflect the blame, portraying Bankman-Fried as a naive and incompetent math geek, but not a criminal
During his testimony, Bankman-Fried admitted to making mistakes, but insisted he never committed fraud. He testified that he became aware that Alameda Research had spent $8 billion of FTX customer funds only two months before the exchange collapsed.
However, Bankman-Fried’s former colleagues turned on him. Caroline Ellison, former co-CEO at Alameda Research and Bankman-Fried’s ex-girlfriend, pleaded guilty to criminal charges and testified under a cooperation agreement with prosecutors, saying she committed fraud with him at his direction.
Additionally, Ellison said Bankman-Fried was a believer in utilitarianism, and thought that rules against lying or stealing inhibited his ability to deliver the greatest benefits for the most people.
Gary Wang, co-founder and former chief technology officer at FTX, also admitted to a number of criminal charges including wire fraud, securities fraud and commodities fraud, while accusing Bankman-Fried of the same.
Image: Wikimedia Commons
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