NEW YORK, Nov 2 (Reuters) – FTX founder Sam Bankman-Fried was found guilty on Thursday of stealing from customers of his now-bankrupt cryptocurrency exchange in one of the largest financial frauds of all time. The fall of the old former billionaire.
A 12-member jury in Manhattan federal court convicted Bankman-Fried of all seven counts he faced after a month-long trial in which prosecutors argued that he stole $8 billion from the exchange’s users out of sheer greed captured.
The ruling came nearly a year after FTX filed for bankruptcy amid a rapid corporate crisis that shocked financial markets and wiped out his estimated $26 billion in personal wealth.
The jury reached its verdict after deliberating for just over four hours. Bankman-Fried, who had pleaded not guilty to two counts of fraud and five counts of conspiracy, stood before the jury with his hands folded in front of his body as the verdict was read.
The conviction was a victory for the U.S. Justice Department and Damian Williams, the top federal prosecutor in Manhattan, who made fighting corruption in financial markets one of his top priorities.
“The crypto industry may be new, the players like Sam Bankman-Fried may be new, but this type of fraud is as old as time and we have no patience for it,” Williams told reporters outside the courthouse.
Once the darling of the crypto world, Bankman-Fried – who was known for his unkempt curls and wearing shorts and T-shirts instead of business attire – joins the ranks of well-known Ponzi schemers such as Bernie Madoff and “Wolf of Wall Street” “scammers Jordan Belfort as notable individuals convicted of serious U.S. financial crimes.
U.S. District Judge Lewis Kaplan set Bankman-Fried’s sentencing for March 28, 2024. The Massachusetts Institute of Technology graduate faces decades in prison.
His defense attorney, Mark Cohen, said in a statement that he was “disappointed” but respected the jury’s decision.
“Mr. Bankman-Fried maintains his innocence and will continue to vigorously fight the allegations against him,” he said.
After Kaplan left the courtroom, Cohen put his arm around Bankman-Fried as they spoke at the defense table.
As Bankman-Fried was led away by members of the U.S. Marshals Service, he turned and nodded to his parents, Stanford Law School professors Joseph Bankman and Barbara Fried, who were sitting in the front row of the courtroom. Fried looked at him and crossed his arm over his chest.
Bankman-Fried is scheduled to stand trial next March on a second set of charges that prosecutors filed earlier this year, including allegations of foreign bribery and conspiracy to commit bank fraud.
[1/5]FTX founder Sam Bankman-Fried looks on as U.S. District Judge Lewis Kaplan instructs and remands jurors for deliberations at federal court in New York City, U.S., on November 2, 2023, during his fraud trial over the collapse of the bankrupt cryptocurrency exchange. in this courtroom… acquire licensing rights
BANKMAN-FRIED TESTED IN HIS OWN DEFENSE
Bankman-Fried’s case was the first of several blockbuster cases Williams brought against former senior cryptocurrency executives. Several crypto companies went bankrupt last year after prices for Bitcoin and other digital assets collapsed after a years-long boom.
Prosecutors argued during the trial that Bankman-Fried diverted money from FTX to his cryptocurrency-focused hedge fund Alameda Research, even as he proclaimed on social media and in television ads that the exchange prioritized the safety of customers’ funds.
Alameda used the money to pay its lenders and make loans to Bankman-Fried and other executives – who in turn made speculative venture investments and donated more than $100 million to U.S. political campaigns to advance cryptocurrency legislation that the The defendant viewed his business as positive, according to the prosecutor.
Bankman-Fried took the calculated risk of testifying in his own defense for three days near the end of the trial after three former members of his inner circle testified against him. He faced aggressive cross-examination by prosecutors and often avoided direct answers to the most critical questions.
He testified that while he made mistakes in running FTX, such as not putting together a risk management team, he did not steal customer funds. He said he considered Alameda’s borrowing from FTX to be permissible and only realized how high the company’s debt had grown shortly before both companies collapsed.
“We thought we might be able to create the best product on the market,” Bankman-Fried said. “It turned out basically the opposite.”
“He thought the rules didn’t apply.”
Prosecutors disagreed.
“He did not expect his three loyal deputies to take this stand and tell you the truth: that he was the one with the plan, motive and greed to loot FTX customer deposits – billions upon billions of dollars – to make money provide.”, power, influence. He thought the rules didn’t apply to him. He believed he could get away with it,” prosecutor Danielle Sassoon told jurors Thursday.
The jury heard 15 days of testimony. Former Alameda CEO Caroline Ellison and former FTX executives Gary Wang and Nishad Singh, who testified for the prosecution after entering guilty pleas, said he directed them to commit crimes, including helping Alameda loot from FTX and lying to lenders and investors about the companies’ finances.
The defense argued that the three, who have not yet been convicted, falsely accused Bankman-Fried to gain leniency at sentencing. Prosecutors can ask Kaplan to consider her cooperation when deciding her sentence.
Bankman-Fried has been in jail since August after Kaplan revoked his bail because he concluded he was likely witness tampering.
Reporting by Luc Cohen and Jody Godoy in New York; Edited by Will Dunham, Daniel Wallis and Lincoln Feast
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