A 12-person jury found Sam Bankman-Fried guilty of seven counts on Thursday, the culmination of a year-long criminal proceeding following the November 2022 collapse of the crypto exchange FTX.
In an industry known for fraud and excess, Bankman-Fried charted a spectacular path, including a meteoric rise that saw FTX valued at $32 billion after just a few years of operations. After a run on customer deposits last November revealed a massive hole at the center of its business, FTX declared bankruptcy, with Bankman-Fried arrested a few weeks later.
The Department of Justice charged him with seven criminal counts, including wire fraud, securities fraud, and money laundering, alleging that he misappropriated around $8 billion of customer assets for his own purposes, including luxury real estate in the company’s headquarters of the Bahamas, venture investments, and risky trades.
After a month-long trial, the jury needed less than five hours to decide he was guilty of all charges. Such speedy verdicts in high-stakes white-collar cases aren’t the norm.
“Sam Bankman-Fried perpetrated “Picture this: one of the most colossal financial scams in the annals of American history. A multi-billion dollar plot, masterminded to crown him the undisputed ‘Crypto King’,” U.S. Attorney Damian Williams declared at a press conference on a chilly Thursday night. “But here’s the kicker: While the cryptocurrency industry may be a fresh player on the field, and faces like Sam Bankman-Fried might be new to the game, this type of fraud, this level of corruption, is as ancient as the hills. And let me tell you, we have zero tolerance for it.”
The Rise and Fall of the Crypto King
During the crypto gold rush of 2021 and 2022, Bankman-Fried was omnipresent. His face was plastered on billboards and he even made appearances in Super Bowl commercials, promising potential FTX users that the exchange was a secure platform to trade digital assets like Bitcoin.
The spectacular downfall of FTX transformed Bankman-Fried’s legal proceedings into a full-blown spectacle. Even his bail conditions became a source of drama, with Judge Lewis Kaplan sending the crypto mogul to a Brooklyn detention center after he leaked confidential writings from Caroline Ellison—his former flame and the CEO of FTX’s trading firm, Alameda Research—to the New York Times.
The trial kicked off in early October, with DOJ prosecutors parading a lineup of witnesses, including members of his close-knit circle who testified that he had direct involvement in the scheme.
They were accused of swindling billions of dollars from their customers for their own personal gain.
After the prosecution had presented their case, Bankman-Fried did something quite unexpected. He chose to testify – a right that most defendants usually give up to avoid incriminating themselves. Over the course of three grueling days of cross-examination, including one day without the jury present, the prosecutors managed to find inconsistencies in Bankman-Fried’s claim that he was acting in good faith. The crypto founder often claimed he was unaware of the goings-on within his own company.
He Still Claims He’s Innocent
After a little over four hours of deliberation, the jury sent a note to Judge Kaplan on Friday, stating they had reached a verdict: Bankman-Fried was guilty. He could be looking at spending the rest of his life behind bars.
The sentencing is scheduled for March 28. But that’s not all - Bankman-Fried is also facing a second criminal trial in March 2024 for additional charges that were separated due to complications with his extradition agreement with the Bahamas. One of these charges includes an alleged bribe to a Chinese official while his company, Alameda, was based in Hong Kong.
However, Bankman-Fried still has the chance to appeal the verdict.
In response to the verdict, Mark Cohen, Bankman-Fried’s attorney, issued this statement: “We respect the jury’s decision, but we are deeply disappointed with the outcome. Mr. Bankman-Fried continues to assert his innocence and will fight these charges with everything he’s got.”
Conclusion
The conclusion of the trial and the guilty verdict delivered to Sam Bankman-Fried mark a significant moment in the realm of cryptocurrency and financial fraud. Bankman-Fried’s meteoric rise in the crypto industry, once celebrated, has now taken a dark turn with the allegations of misappropriating billions of dollars of customer assets, leading to the collapse of FTX. While his involvement in the scheme and the subsequent trial drew considerable attention, the jury’s swift decision to find him guilty on all charges underscores the severity of the case. U.S. Attorney Damian Williams, speaking about the case, emphasized a zero-tolerance approach to such financial misconduct, emphasizing the gravity of the situation. As the sentencing approaches and a second trial looms, the crypto world watches closely, aware of the implications of this high-profile case for the industry’s integrity and accountability. Bankman-Fried’s claims of innocence set the stage for a legal battle that will continue to captivate both the crypto community and legal observers.
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