NEW YORK – Sam Bankman-Fried, the 31-year-old curly-haired mogul who founded the FTX cryptocurrency exchange, was convicted Thursday of seven charges of fraud and conspiracy after a monthlong trial that laid bare the rampant hubris and risk-taking across the crypto industry.Bankman-Fried became a symbol of crypto’s excesses [last year when FTX collapsed](/business/sam-bankman-fried-fooled-the-crypto-world-and-maybe-even-himself) and he was charged with stealing as much as US$10 billion (S$13.7 billion) from customers to finance political contributions, venture capital investments and other extravagant spending.A jury of nine women and three men took just over four hours of deliberation on Thursday to reach a verdict, convicting Bankman-Fried of wire fraud, conspiracy and money laundering.Together the counts carry a maximum sentence of 110 years.Bankman-Fried is expected to appeal.He’s scheduled to be sentenced on March 28.A Massachusetts Institute of Technology graduate whose mother and father both are Stanford University law professors, he stood and clasped his hands together as the verdict was read.
After Judge Kaplan left the courtroom, Bankman-Fried spoke with his lawyers at the defence table with his head down.
His father put his arm around his mother as they looked on from the courtroom’s front row.The verdict capped one of the fastest and most spectacular falls from grace in modern corporate history.Just a year ago, Bankman-Fried was worth more than US$20 billion.FTX, valued at US$32 billion at its peak, was one of the world’s biggest marketplaces for people to buy and sell digital coins like bitcoin and ether.Bankman-Fried was always expected to face an uphill battle in court.After FTX imploded, three of his top deputies pleaded guilty to fraud and agreed to cooperate with prosecutors in return for leniency.During the trial, they testified that Bankman-Fried had repeatedly directed them to lie to the public and route billions of dollars in customer money from FTX to its sister trading firm, Alameda Research.Bankman-Fried’s lawyers argued that he had operated his businesses in good faith and never intended to break the law.
But they struggled to poke significant holes in the cooperators’ stories.When Bankman-Fried took the stand to defend himself, he often seemed flustered.Mark Cohen, Bankman-Fried’s lawyer, said in a statement that the defense team respected the jury’s verdict.But he added that Bankman-Fried “maintains his innocence and will continue to vigorously fight the charges against him.” Even after the verdict, Bankman-Fried’s legal battle is likely to continue.He is tentatively scheduled for a second trial on campaign finance and other charges early next year, though it’s unclear whether it will take place.In the courtroom Thursday night, US Judge Lewis A.Kaplan, who oversaw the trial, asked prosecutors to give him an update by February on the potential second trial.His conviction represented a victory for the US Justice Department and Mr Damian Williams, the top federal prosecutor in Manhattan, who made rooting out corruption in financial markets one of his top priorities.
Once the darling of the crypto world, Bankman-Fried instead joins the likes of admitted Ponzi schemer Bernie Madoff, Wolf Of Wall Street fraudster Jordan Belfort and insider trader Ivan Boesky as notable people convicted of major US financial crimes.
Prosecutors argued during the trial that Bankman-Fried siphoned money from FTX to his crypto-focused hedge fund, Alameda Research, despite proclaiming on social media and in television advertisements that the exchange prioritised the safety of customer funds.Alameda used the money to pay its lenders and to make loans to Bankman-Fried and other executives – who in turn made speculative venture investments and donated upwards of US$100 million to US political campaigns in a bid to promote cryptocurrency legislation the defendant viewed as favourable to his business, according to prosecutors.Bankman-Fried took the calculated risk of testifying in his own defence over three days near the close of the trial after three former members of his inner circle testified against him.He faced aggressive cross-examination by the prosecution, often avoiding direct answers to the most probing questions.He testified that while [ he made mistakes running FTX](https://www.straitstimes.com/business/sam-bankman-fried-acknowledges-mistakes-but-testifies-he-did-not-defraud-anyone), such as not formulating a risk-management team, he did not steal customer funds.
He said he thought Alameda’s borrowing from FTX was allowed and did not realise how large its debts had grown until shortly before both companies collapsed.“We thought that we might be able to build the best product on the market,” Bankman-Fried testified.“It turned out basically the opposite of that.” Prosecutors had a different view.“He didn’t bargain for his three loyal deputies taking that stand and telling you the truth: That he was the one with the plan, the motive and the greed to raid FTX customer deposits – billions and billions of dollars – to give himself money, power, influence.He thought the rules did not apply to him.
He thought that he could get away with it,” prosecutor Danielle Sassoon told the jury on Thursday.Former Alameda chief executive Caroline Ellison and former FTX executives Gary Wang and Nishad Singh, testifying for the prosecution after entering guilty pleas, said he directed them to commit crimes, including helping Alameda loot FTX and lying to lenders and investors about the companies’ finances.The defence argued the three, who have not yet been sentenced, falsely implicated Bankman-Fried in a bid to win leniency at sentencing.Prosecutors may ask Mr Kaplan to take their cooperation into account in deciding their punishment.NYREUTERS.
