FTX founder Sam Bankman-Fried faced a significant setback on Thursday as a 12-member jury in Manhattan federal court convicted him on all seven counts he faced.
The verdict, which came just shy of one year after FTX filed for bankruptcy, marked one of the biggest financial frauds on record, leading to the downfall of the 31-year-old former billionaire.
During the monthlong trial, prosecutors argued that Bankman-Fried had looted $8 billion from the exchange’s users out of sheer greed. The jury deliberated for just over four hours before reaching the unanimous decision. Bankman-Fried, who had pleaded not guilty to two counts of fraud and five counts of conspiracy, stood facing the jury with his hands clasped in front of him as the verdict was read.
This conviction was a significant win for the U.S. Justice Department and Damian Williams, the top federal prosecutor in Manhattan. Williams has made eradicating corruption in financial markets a top priority.
“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,” Williams said.
Once hailed as the darling of the crypto world, Bankman-Fried, known for his unconventional appearance and attire, now joins the ranks of other notable individuals like Bernie Madoff and Jordan Belfort, who were convicted of major U.S. financial crimes.
U.S. District Judge Lewis Kaplan has scheduled Bankman-Fried’s sentencing for March 28, 2024. The Massachusetts Institute of Technology graduate could potentially face decades in prison. Despite the verdict, Bankman-Fried’s defense lawyer, Mark Cohen, stated, “Mr. Bankman-Fried maintains his innocence and will continue to vigorously fight the charges against him.”
The trial revealed that Bankman-Fried siphoned money from FTX to his crypto-focused hedge fund, Alameda Research, despite public assurances about the safety of customer funds. Prosecutors argued that Alameda used the funds to pay lenders, make loans to Bankman-Fried and other executives, and invest in ventures. Bankman-Fried defended himself during the trial, admitting mistakes in running FTX but denying any wrongdoing. Prosecutors contended that he believed the rules did not apply to him, leading him to engage in the fraudulent activities.
The jury heard testimony from former Alameda CEO Caroline Ellison and former FTX executives Gary Wang and Nishad Singh, who testified against Bankman-Fried, implicating him in the crimes. Despite the defense’s claims that these witnesses were seeking leniency in their own sentencing, the jury found their testimonies credible.
Bankman-Fried, who had been in custody since August due to concerns about witness tampering, now faces the possibility of a lengthy prison term. His conviction serves as a stark reminder of the legal consequences that await those involved in financial fraud, even in the rapidly evolving world of cryptocurrency.
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