Founder of FTXHe was found guilty on seven counts of fraud, conspiracy and money laundering, following more than two weeks of testimony in one of the highest-profile financial crime cases in years.
The 31-year-old former cryptocurrency billionaire was charged with two counts of conspiracy to commit wire fraud, two counts of conspiracy to commit wire fraud and one count of conspiracy to commit money laundering, each of which carries a maximum sentence of 20 years in prison. He was convicted of conspiracy to commit stock fraud and securities fraud, each carrying a maximum sentence of five years in prison.
“Sam Bankman-Fried was involved in one of the biggest frauds in American history, a multibillion-dollar scheme designed to make him the king of crypto,” Damian Williams, U.S. Attorney for the Southern District of New York, said in a press conference. Judgment. “Here’s the thing: The cryptocurrency industry may be new. Players like Sam Bankman-Fried may be new. This kind of fraud, this kind of corruption, is as old as time, and we have no patience for it.”
The MIT graduate has maintained his innocence since his arrest late last year after the startling implosion of FTX, the crypto exchange he co-founded, an $8 billion cash deficit and allegations that he used client money to prop up his struggling hedge fund. Alameda Research.
Bankman-Fried’s attorney, Mark S. Cohen, said in a statement, “We respect the jury’s decision. But the decision is very disappointing to us. Mr. Bankman Fried maintains his innocence and will vigorously fight the charges against him.”
Bankman-Fried is accused of using some of that money to buy real estate, make political contributions and fund charitable pet projects.
In more detail, FTXsThe sudden collapse of other major industries evaporated billions in clients’ wealth.
As the verdict was read, Bankman-Fried stood frozen, facing the jury. His parents, seated in the courtroom, held each other and looked closely.
According to his lawyers, it was a spectacular and supersonic fall for a man who twelve months ago still believed his billion-dollar empire was solvent.
“A lot of people believed in him, he was a genius,” former FTX employee Natalie Dean told CBS News.
After months of confusion and depression as her empire collapsed, Dean said attending her former boss’ trial was bittersweet, and she also “lost a lot of money.”
“Sam Bankman-Fried thought he was above the law,” U.S. Attorney Merrick Garland said in a statement. “Today’s verdict proves him wrong. This case should send a clear message that those who say they try to hide their crimes behind a shiny new thing, no one else is smart enough to understand: The judiciary will hold you accountable.”
Bankman-Fried’s lawyer and federal prosecutorsbefore a New York City judge on Wednesday after more than four weeks of testimony.
Witnesses in the case included Carolyn Ellison, Nishad Singh and Gary Wang, who all once worked for FTX or Bankman-Fried in Alameda and who all pleaded guilty to multiple charges, including participating in a scheme to defraud customers of millions.
The trio allege that FTX used client money to cover losses on everything from a luxury condo in the Bahamas to Bankman-Fried’s cryptocurrency hedge fund.
Ellison testified that Bankman-Fried directed him to withdraw money from FTX client accounts to fund investments and trading strategies in Alameda. FTX co-founder Wang described how he and the defendant engaged in financial crimes and lied about it, while Singh, FTX’s former director of engineering, described how Bankman-Fried spent FTX money.
Defense attorneys tried to portray Bankman-Fried as a math whiz who made bad management decisions at FTX but was blameless when it came to building his crypto empire.
In the end, it was perhaps the most poignant scene during Bankman-Fried’s own testimony that carried the most weight and caused the most damage. Under cross-examination by the prosecutor, Bankman-Fried said she couldn’t remember a document, conversation or other key detail “more than 140 times.” “He’s lying,” the government repeated.
Bankman-Fried testified that Alameda’s expenses came from corporate, not the customer, funds, and that her mistakes were not ulterior motives. FTX was intended to “move the ecosystem forward,” he testified during the proceedings. “It turned out to be the opposite.”
Judge Louis Kaplan must now decide what Bankman-Fried’s sentence will be. The charges legally require a minimum of 110 years, and the sentencing guidelines provide a sort of formula, with the judge having broad discretion to sentence below that guideline. However, CBS News legal analyst Ricky Kleiman says Judge Kaplan “may even go above the guidelines if he believes the defendant committed perjury in his courtroom.”
For his part, Tien, a former FTX employee, said the jail term might be too harsh, and instead wondered if Bankman-Fried could help the government investigate other potential crypto-trading scams.
The next trial in United States v. Sam Bankman-Fried is scheduled for March 11, 2024, when other charges not brought by the government will be folded into another court proceeding.
The trial marks the beginning of the so-called end of the crypto king’s meteoric rise, nearly a year to the day since FTX stopped allowing customers to withdraw deposits.