Ex-crypto mogul Sam Bankman-Fried convicted of defrauding FTX customers FTX founder Sam Bankman-Fried has been found guilty of defrauding customers of his now-bankrupt cryptocurrency exchange in one of the biggest financial frauds on record.Key points: – Sam Bankman-Fried was found guilty of two counts of fraud and five counts of conspiracy – The 31-year-old former billionaire will be sentenced in March 2024 – His defence lawyers are expected to appeal the verdict A 12-member jury in Manhattan federal court convicted the 31-year-old after a month-long trial in which prosecutors made the case that he stole $US8 billion ($12.4 billion) from the exchange’s customers out of sheer greed.The verdict came just shy of one year after FTX filed for bankruptcy in a swift corporate meltdown that shocked financial markets and erased his estimated $US26 billion personal fortune.Bankman-Fried, who is a Massachusetts Institute of Technology graduate whose mother and father are both Stanford University law professors, had pleaded not guilty to two counts of fraud and five counts of conspiracy.The jury reached the verdict after just over four hours of deliberations.
Bankman-Fried stood and clasped his hands together as the verdict was read.The conviction represented a victory for the US Justice Department and Damian Williams, the top federal prosecutor in Manhattan, who made rooting out corruption in financial markets one of his top priorities.
US District Judge Lewis Kaplan set Bankman-Fried’s sentencing for March 28, 2024.
His defence lawyers, who objected to several rulings by Judge Kaplan before and during the trial, are expected to appeal the verdict.Bankman-Fried is also set to go on trial on a second set of charges brought by prosecutors earlier this year, including for alleged foreign bribery and bank fraud conspiracies.A stunning fall from grace Once the darling of the crypto world, Bankman-Fried 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.The jury began deliberations on Thursday after hearing the prosecution’s rebuttal to the defence’s closing arguments delivered a day earlier.Loading…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.According to prosecutors, 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 $US100 million to US political campaigns in a bid to promote cryptocurrency legislation the defendant viewed as favourable to his business.Bankman-Fried took the calculated risk of testifying in his own defence over three days near the close of 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, such as not formulating a risk-management team, he did not steal customer funds.Bankman-Fried 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.” Prosecutor Danielle Sassoon 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,” she told the jury on Thursday.”He thought the rules did not apply to him.He thought that he could get away with it.”Loading…The jury heard 15 days of testimony.
Former Alameda CEO 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 company’s 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 Judge Kaplan to take their cooperation into account in deciding their punishment.Bankman-Fried has been jailed since August after the judge revoked his bail, [having concluded he likely tampered with witnesses](/news/2023-08-12/sam-bankman-fried-jailed-ftx-caroline-ellison/102722478).Judge Kaplan blocked Bankman-Fried from calling several proposed expert witnesses, and ruled he could not testify about the involvement of lawyers in FTX decisions at issue in the trial.Reuters.
