On Thursday, Sam Bankman-Fried was convicted guilty of his part in the demise of the cryptocurrency exchange FTX.
After fifteen days of testimony and around four and a half hours of deliberation, the jury reached a guilty verdict on seven charges of conspiracy and fraud.
Bankman-fried was dejected when the decision was announced. He stood, head lowered, shaking while his lawyer talked in his ear after the jury was discharged. His parents were standing a few steps behind him, observing. Bankman-Fried glanced back to his parents and grinned as he was led out of the room. Joe Bankman, his father, slung his arm around his wife’s shoulders. Barbara Fried started crying as their son left the room.
US Attorney Damian Williams praised the jury’s decision during statements made on Thursday outside the Manhattan courthouse, stating that the government has “no patience” for corruption and fraud.
He remarked, “These players like Sam Bankman-Fried may be new, but corruption and fraud of this kind go back centuries.”
However, the lawyer for Bankman-Fried expressed their “disappointment.”
“We honor the jury’s verdict. However, we are quite dissatisfied with the outcome,” main defense lawyer Mark Cohen said in a release. “Mr. Bankman Fried will continue to vigorously fight the charges against him and maintains his innocence.”
The date of the sentence hearing is set for March 28, 2024.
Bankman-Fried was convicted of embezzling billions of dollars from the accounts of users of his formerly very successful cryptocurrency exchange, FTX. Additionally, he was convicted of cheating lenders at FTX’s sister company, Alameda Research, a hedge fund that kept FTX customer monies in a bank account.
Bankman-Fried testified during his trial that he was informed in 2020 that Alameda was holding FTX customer monies, but he did nothing to protect them.
Upon his subsequent discovery in the When Alameda owed FTX $8 billion in the fall of 2022, nobody was let go.
Additional fees Among the charges for which Bankman-Fried was found guilty were money laundering and misleading FTX investors.
The decision brings an end to a year-long journey that saw the 31-year-old Bankman-Fried go from being a billionaire in a lavish Bahamas condominium to a defendant in one of the largest white-collar crime cases since Bernie Madoff’s collapsed Ponzi scheme in 2009.
One of the most reputable names in cryptocurrency used to be FTX. Regulators, investors, and the cryptocurrency community have been keenly monitoring the trial for any indications of a possible bigger crackdown on the largely unregulated market.
The decision was made a year after FTX went into a death spiral that caused fear in the trillion-dollar cryptocurrency market, putting an estimated 1 million consumers at risk of financial loss. The exchange drew millions of users and a group of A-list supporters, including Gisele Bundchen and Tom Brady, before it crashed.
FTX, which was established by Bankman-Fried in 2019, presented itself as a simple and safe way to begin trading cryptocurrencies, which are virtual assets whose value is mostly derived on a general optimism about its unclear future applications.
With loan rates at zero and millions of novice investors stranded at home in the early 2020s, FTX’s appeal as a cryptocurrency site took off. By 2022, FTX had its name all over the Miami Heat’s arena and was running Super Bowl commercials.
However, FTX filed for bankruptcy on November 11, 2022, following, This amounted to a bank run as a result of consumer concern brought on by a document leak indicating FTX and another Bankman-owned company may have had irregular financial operations.
However, unlike bank clients, FTX depositors were not covered by a federal insurance fund in the event that their money dried up. Furthermore, Bankman-Fried’s other company had been covertly withdrawing deposits to pay back its own lenders, finance executives’ opulent lifestyles, gamble in cryptocurrency markets, and donate millions of dollars to US political campaigns—all in spite of FTX’s public declarations that it did not invest or transfer customer deposits in any manner.
The other company was Alameda Research, a cryptocurrency trading house that Bankman-Fried founded in 2017 and resembled a hedge fund.
How Alameda was operating
According to Wang’s testimony, almost immediately after FTX was established in 2019, Bankman-Fried gave co-founder Gary Wang and Chief Technology Officer Nishad Singh instructions to modify the platform’s code to grant Alameda, as a client on the exchange, certain “special privileges” that other customers did not.
In accordance with a plea agreement with the government, Wang and Singh have both admitted guilt to financial offenses.
According to Wang’s testimony, one of these benefits was an almost limitless credit line that Alameda’s executives may access at any moment. Additionally, Wang said that Alameda’s primary trading account was given a “allow negative” signal, allowing it to experience a negative balance without consequence—a capability not extended to any other FTX user.
star witness and ex-girlfriend
During the four weeks of his trial, Bankman-Fried heard testimony from a long list of individuals he had previously regarded as his closest confidantes. Among them were MIT and math camp pals who later joined him as co-founders; crucially, though, was his 28-year-old ex-girlfriend and confidante in business matters, Caroline Ellison.
Ellison provided the most damaging testimony against Bankman-Fried during his three days of prosecution testimony.
Being Bankman-Fried’s romantic partner for two years and the CEO of Alameda, Ellison was in a unique position to remark on goings-on within the exclusive group of FTX and Alameda executives, many of whom shared a $30 million opulent apartment in the Bahamas.
Ellison’s occasionally tearful testimony provided a story of what happened in which almost Bankman-Fried was the founder and significant shareholder of both companies, hence he made all of the decisions at Alameda and FTX. Ellison would frequently respond to questions about who gave her the go-ahead to do such crimes or not by saying something along the lines of “Sam did.”
Mary’s Hail SBF
Immediately up against him was a group of influential witnesses, so Bankman-defense Fried’s was contested.
His defense attorney seemed to make a mistake when cross-examining the witnesses during the trial.
In criminal trials, attorneys usually urge their clients not to testify since doing so exposes them to potentially damaging cross-examination by prosecutors. However, a number of legal experts claimed that Bankman-Fried’s situation was unique. He was left without any supporters to fight off his betrayed business partners. Making the stand was a high-stakes gamble, the kind on which Bankman-Fried had made his career.
Howard Fischer, a partner at Moses Singer Law Firm and a former SEC attorney, stated of Bankman-Fried, “He has an outsized appetite and tolerance for risk.”
Testing is challenging labor. Not only is it important to accurately recount the story, but it’s also important to learn how to answer questions and handle the pressure of cross-examination, according to Fischer. “Ideally, months of preparation ahead of mock juries would be ideal before taking the stand.”
However, Bankman-trial Fried’s preparation was made much more difficult when Judge Lewis Kaplan withheld his bail in August, citing the defendant’s alleged disclosure of Ellison-related data to the New York Times, according to the prosecution. After further allegations of witness tampering, that was the last straw for Kaplan, who sent Bankman-Fried to a federal jail in Brooklyn, New York, with less access to legal representation.
What happens to Bankman-Fried next?
Sam Bankman-sentence Fried’s hearing before Judge Lewis Kaplan is scheduled for March 28. While awaiting punishment, he is anticipated to stay in a federal facility located in Brooklyn.
His legal troubles are far from being solved.
Judge Kaplan has ordered prosecutors to determine by February 1 whether to proceed with a second trial on five additional charges that were removed from these proceedings. The trial is set to take place in March.
Within the judicial room
The jury took little under five hours to deliberate before reaching a decision.
As each count was read aloud, Sam Bankman-Fried’s parents, who were seated in the galley’s second row, gave each other firm hugs. With every “guilty” being read aloud, Joseph Bankman plunged further and further into his lap.
He felt Barbara Fried’s arm around him, pressing his shoulder as she did.
As she heard the verdict, her jaw trembled and she pushed her hands to her cheeks while frowning and looking straight at her son.
Bankman-parent Fried’s started to leave the courtroom, and they approached him. Lead defense lawyer Mark Cohen motioned for them to hold off while he had a conversation with Bankman-Fried.
Barbara Fried hammered her fist into her chest on her heart and sank her face into Joseph Bankman’s shoulder, but Bankman-Fried did not turn to see his parents until he was almost outside the exit door. He offered them a solemn grin.