Sam Bankman-Fried, the founder of FTX, was found guilty on Thursday of engaging in one of the largest financial scams in history by taking bitcoin exchange customers’ money. The decision solidified the 31-year-old former billionaire’s decline from prominence.
Following a month-long trial in which prosecutors argued that Bankman-Fried stole $8 billion from the exchange’s users out of pure greed, a 12-member jury in Manhattan federal court found him guilty on all seven counts against him.
The decision was made just under a year after FTX abruptly filed for bankruptcy, shocking the financial world and wiping off his estimated $26 billion in personal wealth.
After somewhat more than four hours of deliberation, the jury returned their decision. With his hands clenched in front of him, Bankman-Fried faced the jury after entering a not guilty plea to two counts of fraud and five counts of conspiracy. The verdict was read aloud.
The US Justice Department and Manhattan’s chief federal prosecutor, Damian Williams, who made eliminating financial sector wrongdoing a primary priority, celebrated the conviction.
“We have no patience for this kind of fraud,” Williams said to reporters outside the courthouse. It’s possible that the cryptocurrency market and individuals like Sam Bankman-Fried are relatively new.
Formerly the center of attention in the cryptocurrency world, Bankman-Fried—known for his disheveled, curly hair and his preference for shorts and T-shirts over business attire—joins the ranks of well-known individuals convicted of serious financial crimes in the United States, including acknowledged Ponzi schemer Bernie Madoff and “Wolf of Wall Street” fraudster Jordan Belfort.
Judge Lewis Kaplan of the US District Court scheduled Bankman-Sentence Fried’s on March 28, 2024. A graduate of the Massachusetts Institute of Technology may spend decades behind bars.
In a statement, Mark Cohen, his defense attorney, expressed his “disappointment” but acknowledged the jury’s verdict.
“Mr. Bankman-Fried believes his innocence and will continue to actively fight the charges against him,” he said.
Cohen encircled Bankman-Fried with his arm after Kaplan left the courtroom and they conversed at the defense table.
Turning to face his parents, Stanford Law School professors Joseph Bankman and Barbara Fried, who were sitting in the front row of the courtroom audience, Bankman-Fried nodded as he was escorted away by US Marshals officers. Fried folded her arm over her chest and turned to face him.
On a second batch of allegations brought by prosecutors earlier this year, including alleged bank fraud conspiracies and overseas bribery, Bankman-Fried is scheduled to go on trial in March of next year.
Bankman-Fried testified in his own defense.
Williams pursued numerous high-profile lawsuits against former high-flying bitcoin executives, and Bankman-Fried’s was the first to go to trial. After years of rising prices, several cryptocurrency businesses filed for bankruptcy last year as the value of bitcoin and other digital assets crashed.
During the trial, prosecutors contended that Bankman-Fried stole money from FTX to his hedge fund, Alameda Research, which specialized in cryptocurrency, even though he had stated on social media and in TV commercials that the exchange placed a high priority on the security of user assets.
Prosecutors claim that Alameda used the funds to pay its lenders and to lend money to Bankman-Fried and other executives, who then made risky venture investments and contributed more than $100 million to US political campaigns in an effort to advance cryptocurrency laws that the defendant thought would benefit his company.
Near the end of the trial, after three former members of his inner circle had testified against him, Bankman-Fried took the calculated risk of testifying in his own defense over the course of three days. The prosecution used aggressive cross-examination tactics against him, frequently omitting direct responses to the most pointed queries.
He stated in his testimony that although he did not steal customer funds while running FTX, he did make mistakes, such as failing to build a risk-management team. He claimed to have been unaware of how much Alameda’s debt had increased until just before the demise of both businesses and to have believed that the company’s borrowing from FTX was permitted.
According to Bankman-Fried’s testimony, “We thought that we might be able to build the best product on the market.” “It turned out to be basically the opposite of that.”
“He believed the rules did not respond.”
The prosecution thought otherwise. The fact that he was the one with the plan, the desire, and the greed to siphon off billions and billions of dollars from FTX client accounts in order to enrich himself was not something he had bargained for his three loyal deputies to take. He felt that the limitations did not apply to him. On Thursday, prosecutor Danielle Sassoon stated to the jury, “He believed he could get away with it.”
For fifteen days, the jury heard testimony. In their testimony for the prosecution following their guilty pleas, former FTX executives Gary Wang and Nishad Singh, together with former CEO of Alameda Caroline Ellison, claimed he gave them orders to commit crimes, such as assisting Alameda in stealing from FTX and lying to investors and lenders about the companies’ financial situation.
The three defendants, who have not yet received a sentence, allegedly falsely accused Bankman-Fried in an effort to obtain mercy at sentencing. Prosecutors might ask Kaplan to take their cooperation into account when determining the appropriate sentence.
Since August, Bankman-Fried has been detained since Kaplan revoked his bail, concluding that he probably tampered with witnesses.