FTX founder, Sam Bankman-Fried, has been found guilty of seven counts of defrauding and looting an estimated $8 billion from customers of his cryptocurrency exchange.
A 12-member jury in Manhattan federal court reached the unanimous verdict after deliberating for just over four hours, marking a significant milestone in one of the most high-profile cases in the cryptocurrency industry.
The verdict came approximately a year after FTX filed for bankruptcy, a stunning corporate collapse that reverberated through financial markets and led to the dissolution of Bankman-Fried’s estimated $26 billion personal fortune.
As a result of the conviction, U.S. District Judge Lewis Kaplan has scheduled Bankman-Fried’s sentencing for March 28, 2024, leaving the possibility of decades in prison looming.
This conviction represents a significant success for the U.S. Justice Department and Damian Williams, the prominent federal prosecutor in Manhattan, who has prioritized eradicating corruption in financial markets.
In response to the conviction, Damian Williams stated outside the courthouse: “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.”
In contrast, Mark Cohen, Bankman-Fried’s defense lawyer, expressed disappointment with the verdict but noted that they respected the jury’s decision.
Cohen reiterated Bankman-Fried’s stance on maintaining his innocence and vowed to continue vigorously fighting the charges against him.
During his trial, Bankman-Fried testified that he had not defrauded FTX customers or misappropriated their funds. He contended that Alameda Research, his cryptocurrency trading firm, had merely “borrowed” money from the exchange.
Prosecutors, however, presented evidence to argue that Bankman-Fried made false promises and was accountable for the substantial losses incurred by thousands of FTX investors. They maintained that he had numerous opportunities to rectify the situation but instead chose to exacerbate it.
The December 2022 indictment by the Department of Justice alleged that Bankman-Fried knowingly defrauded FTX customers by misusing their deposits for investments in other companies and to repay lenders and expenses. The court and jury’s subsequent ruling deemed this statement to be accurate.
During the trial, former Alameda CEO Caroline Ellison, along with former FTX executives Gary Wang and Nishad Singh, testified for the prosecution.
They had previously entered guilty pleas, claiming that Bankman-Fried had instructed them to engage in criminal activities, including aiding Alameda in looting FTX and providing false information to lenders and investors about the financial health of the companies.
The defense, however, argued that the three witnesses, who have yet to be sentenced, had falsely implicated Bankman-Fried in the hopes of receiving more lenient sentences. Prosecutors may request that their cooperation be considered when determining their penalties.
