In a stunning turn of events, Sam Bankman-Fried, the founder of FTX, once a prominent figure in the cryptocurrency world, has been found guilty of orchestrating one of the most significant financial frauds in history. A jury in Manhattan federal court convicted the 31-year-old former billionaire on all seven counts he faced following a month-long trial.
The verdict, which comes nearly a year after FTX’s shocking bankruptcy, is a significant win for the U.S. Justice Department and its commitment to combating corruption in financial markets. Damian Williams, the top federal prosecutor in Manhattan, stated, “The crypto industry might be new, the players like Sam Bankman-Fried may be new, but this kind of fraud is as old as time, and we have no patience for it.”
Once celebrated for his unconventional appearance and approach in the cryptocurrency world, Bankman-Fried’s downfall places him in the company of infamous financial criminals like Bernie Madoff and Jordan Belfort. The sentencing for Bankman-Fried has been set for March 28, 2024, and he could potentially face decades in prison.
In response to the verdict, Bankman-Fried’s defence lawyer, Mark Cohen, expressed disappointment but acknowledged the jury’s decision. He emphasized that his client maintains his innocence and will continue to vigorously fight the charges against him.
As Bankman-Fried was led away by U.S. Marshals, he exchanged a poignant nod with his parents, Joseph Bankman and Barbara Fried, both professors at Stanford Law School. Bankman-Fried is also facing a second set of charges, including allegations of foreign bribery and bank fraud conspiracies, which are scheduled for trial in the coming year.
This trial represents the first of several high-profile cases against cryptocurrency executives initiated by Williams. Last year saw numerous crypto companies declaring bankruptcy amid a sharp decline in digital asset prices. Prosecutors argued that Bankman-Fried diverted funds from FTX to his crypto-focused hedge fund, Alameda Research, despite claiming to prioritize the safety of customer funds.
Alameda Research allegedly used these funds to pay its lenders and make loans to Bankman-Fried and other executives, who, in turn, made speculative investments and donated substantial sums to U.S. political campaigns to promote cryptocurrency legislation favorable to their business.
During the trial, Bankman-Fried took the witness stand, attempting to defend himself over three days. He admitted to making mistakes while managing FTX but vehemently denied stealing customer funds. He argued that he believed Alameda’s borrowing from FTX was within the rules, only realizing the extent of the debt shortly before the collapse of both companies.
Prosecutor Danielle Sassoon countered this by stating, “He thought that he could get away with it.” The jury heard 15 days of testimony, including accounts from former Alameda CEO Caroline Ellison and former FTX executives Gary Wang and Nishad Singh, who claimed Bankman-Fried directed them to commit crimes. The defense argued that these individuals falsely implicated Bankman-Fried in an attempt to secure more lenient sentencing.
Bankman-Fried has been in custody since August, as the judge revoked his bail amid concerns of witness tampering. The verdict not only marks a significant moment in the cryptocurrency world but also underscores the U.S. government’s commitment to upholding the integrity of financial markets.