Sam Bankman-Fried has been found guilty of all charges stemming from the collapse of his cryptocurrency exchange company FTX.
“A New York jury in Manhattan federal court agreed with prosecutors that Bankman-Fried defrauded investors, customers and lenders in connection with the collapse of his crypto empire,” reported Fox Business.
“Prosecutors accused Bankman-Fried, who founded and controlled both FTX and sister hedge fund Alameda research, of misappropriating and embezzling billions of dollars in FTX customer deposits, scheming to mislead investors, and instructing other executives at his businesses to do the same,” it added.
In the first of two criminal trials, Bankman-Fried faced five counts of conspiracy and two counts of wire fraud, which all amount to up to 110 years in prison. His sentencing hearing has been set for March 28.
Damian Williams, U.S. attorney for the Southern District of New York, praised the verdict as he declared that Bankman-Fried “perpetrated one of the biggest financial frauds in American history.”
“The cryptocurrency industry might be new, the players like Bankman-Fried might be new,” Williams said. “But this kind of fraud, this kind of corruption, is as old as time.”
NBC News provided some history and context leading up to the verdict:
FTX and Alameda quickly collapsed in November 2022 after some of their financial liabilities were exposed. The fact that Alameda had taken billions of dollars from FTX’s customers, and that much of Alameda’s balance sheet was comprised of digital currency assets it had created, was central to the case against Bankman-Fried.
Unnerved by disclosures about the firm’s financial position, many of FTX’s customers tried to get their money back. That set off the equivalent of a bank run.
The value of Alameda’s investments crashed, and FTX couldn’t return much of that money because it had been given to Alameda. Some went to the fund’s lenders, and billions were spent on sponsorships, commercials, and loans to top executives. That, too, was a major part of the case against Bankman-Fried.
Other FTX and Alameda leadership have been charged in the wake of the collapse, including former Alameda CEO Caroline Ellison, FTX co-founder Gary Wang, and FTX technology chief Nishad Singh, who all pleaded guilty and agreed to cooperate with the prosecution and testify against Bankman-Fried. They will be receiving lighter sentences as a result.
Bankman-Fried’s defense argued that he never intended to defraud people and claimed that the government had been looking for a fall guy in the wake of the FTX and Alameda collapse.
“Mr. Bankman Fried maintains his innocence and will continue to vigorously fight the charges against him,” Mark S. Cohen, counsel to Bankman-Fried, said in response to the verdict.
Williams said he hopes the conviction sets an example.
“It’s a warning, this case, to every single fraudster out there who thinks that they’re untouchable, or that their crimes are too complex for us to catch, or that they’re too powerful for us to prosecute, or that they could try to talk their way out of it when they get caught,” Williams said. “Those folks should think again.”
Paul Roland Bois directed the award-winning feature film, EXEMPLUM, which can be viewed for FREE on YouTube or Tubi. A high-quality, ad-free stream can also be purchased on Google Play or Vimeo on Demand. Follow him on Twitter @prolandfilms or Instagram @prolandfilms.