- Sam Bankman-Fried, the co-founder and former CEO of FTX, was yesterday convicted on seven counts of wire fraud and conspiracy to launder money
- The verdict came after a month-long trial which contained startling revelations about FTX’s collapse in November last year
- Bankman-Fried’s sentencing is set for March 28, 2024, where he faces decades in prison.
Sam Bankman-Fried, the founder of the defunct crypto exchange FTX, was yesterday convicted on all counts related to defrauding his customers to the tune of billions of dollars. The once-prominent figure in the crypto world was found guilty of seven counts of wire fraud and conspiracy to launder money following revelations that surfaced after the exchange’s collapse in November last year. The verdict came after just four hours of jury deliberation, concluding a month-long trial marked by astonishing testimony from Bankman-Fried’s associates and the entrepreneur himself, who maintained his innocence throughout the proceedings. Bankman-Fried will be sentenced on March 28, 2024, where he could potentially face decades in prison.
Bankman-Fried Confronted With Own Words
Bankman-Fried was accused of defrauding FTX customers of approximately $10 billion, with prosecutors alleging that the fraudulent activities spanned from 2019 to November 2022. FTX’s collapse was attributed to a liquidity crisis resulting from the unauthorized lending of customer funds to Alameda Research, FTX’s sister hedge fund, without customers’ knowledge.
During his testimony, Bankman-Fried admitted to significant errors in his management of the exchange, such as the absence of a risk management team. He frequently responded with “I don’t recall” to evade prosecutors’ questions, only to be confronted with his own on-the-record statements made during post-collapse media interviews, conducted as part of his ill-advised post-collapse publicity tour.
Bankman-Fried confessed to using “stolen funds” to enrich himself and support Alameda’s high-risk investments, which funded his lavish lifestyle, including extravagant spending on political contributions and celebrity endorsements.
He also covered personal expenses, such as a $200 million Bahamas property and repaying loans to Alameda, which faced an $8 billion budget shortfall due to the crypto market downturn in 2022.
“Math Nerd” Defense Fails
Throughout the trial, Bankman-Fried’s defense sought to portray him as an inexperienced “math nerd” who was in over his head. His lawyer, Mark Cohen, argued that he did not intend to defraud anyone and acted in good faith while building and running FTX and Alameda.
The defense also attempted to shift blame onto figures such as Alameda CEO Caroline Ellison and rival cryptocurrency exchange Binance for FTX’s collapse, emphasizing that some aspects of the company were still evolving.
Bankman-Fried is set to go on trial for a second set of charges, including alleged foreign bribery and bank fraud conspiracies, brought by prosecutors earlier in the year as well as civil charges brought by the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission.
