FTX Founder Sam Bankman-Fried Convicted of Fraud, Money Laundering, and Conspiracy
Sam Bankman-Fried, the founder of cryptocurrency exchange FTX, has been found guilty on all seven counts of fraud, conspiracy, and money laundering. The 31-year-old former billionaire was convicted of multiple charges, including wire fraud conspiracy, wire fraud, conspiracy to commit money laundering, conspiracy to commit commodities fraud, and conspiracy to commit securities fraud.
Prosecutors described Bankman-Fried’s actions as one of the largest frauds in American history, designed to make him a dominant figure in the cryptocurrency industry. The verdict was followed by a news briefing from Damian Williams, the U.S. attorney for the Southern District of New York, who emphasized that fraud and corruption are not new, even in the emerging cryptocurrency industry.
Bankman-Fried, a graduate of MIT, maintained his innocence throughout the trial. His arrest came after the collapse of FTX, which faced an $8 billion shortfall in funds. Allegations surfaced that Bankman-Fried had used customer money to support his struggling hedge fund, Alameda Research. He was accused of diverting funds for various personal purposes unrelated to FTX’s primary business.
The bankruptcy of FTX in November 2022 had a significant impact on the entire crypto industry, with billions of dollars in client wealth disappearing due to the sudden collapse of major players. As the verdict was announced, Bankman-Fried stood motionless, while his parents, sitting in the courtroom, clung to each other, closely observing the outcome.
Natalie Tien, a former FTX employee, expressed her relief and described attending the trial as a cathartic experience. She had experienced confusion and depression when Bankman-Fried’s empire collapsed, resulting in substantial financial losses for herself and others.
The prosecution presented witnesses who had worked for Bankman-Fried at FTX or Alameda and had pleaded guilty to their involvement in an alleged scheme defrauding millions of customers. They testified that he used FTX customer funds for personal purchases and to cover losses at Alameda. Bankman-Fried’s defense attorneys aimed to portray him as a math enthusiast who made bad management decisions but had no criminal intentions in building his crypto empire.
During his testimony, Bankman-Fried’s repeated inability to recall key details worked against him. The prosecution argued that his repeated assertions of memory loss were simply lies. He claimed that Alameda’s expenses came from corporate funds, not customer funds, and that any mistakes he made were unintentional. He stated that FTX was established to advance the crypto ecosystem, but it had ended up having the opposite effect.
The judge, Lewis Kaplan, will determine Bankman-Fried’s sentence. While the charges carry a minimum of 110 years in prison, the judge has discretion to rule below that guideline. However, it is possible that Judge Kaplan may choose to exceed the guidelines if he believes that Bankman-Fried committed perjury in court.
Looking ahead, there will be another trial on March 11, 2024, where additional charges that were not initially brought forward will be addressed.
This trial marks one year since FTX halted customer withdrawals, signaling the downfall of the once-dominant figure in the crypto industry.
(CBS News)
