Sam Bankman-Fried, Crypto’s Fallen King, Convicted of Fraud
The jury returned its verdict after deliberating for less than five hours.
It concludes a stunning fall from grace for the 31-year-old former billionaire and one of the crypto industry’s most public faces.
Bankman-Fried was arrested last year after her company FTX went bankrupt.
Now he will have to stay in jail for decades. His sentencing is scheduled for March 28 next year.
“Sam Bankman-Fried perpetrated one of the largest financial frauds in American history – a billion-dollar scheme designed to make him the king of crypto,” US attorney Damien Williams said in a statement after the verdict. ”
“This case has always been about lying, cheating and stealing and we have no patience for that,” he said.
Prosecutors had accused Bankman-Fried of lying to investors and lenders and stealing billions of dollars from cryptocurrency exchange FTX, helping lead to its collapse. They charged him with seven counts of fraud and money laundering.
He pleaded innocent to all charges and said that although he had made mistakes, he had acted with good intentions.
After the verdict, Bankman-Fried’s attorney Mark Cohen said: “We respect the jury’s decision. But we are very disappointed with the outcome.”
“Mr. Bankman-Fried maintains his innocence and will continue to vigorously fight the charges against him,” he said.
A spokesperson for Bankman-Fried did not immediately respond to a BBC request for comment on whether she planned to appeal the decision.
Three of his former close friends and colleagues, including his ex-girlfriend Caroline Ellison, pleaded guilty and agreed to testify against him in hopes of reducing his sentence.
He will be sentenced at a later date.
Former federal prosecutor Renato Mariotti said, “The government won this case by putting a lot of pressure on the cooperatives, making deals with them very early, and trying the case in a very orderly manner.”
“Instead of making the case more complicated, turning it into some complicated crypto case, they tried it as a garden variety fraud.”
Prosecutors presented evidence that Bankman-Fried’s crypto trading firm Alameda Research received deposits on behalf of FTX customers from the early days of the exchange, when traditional banks were unwilling to open accounts with it.
Instead of safeguarding those funds, as Bankman-Fried had repeatedly publicly promised to do, she spent the money to repay Alameda lenders, buying property and making investments and political donations.
Bankman-Fried was found guilty of a maximum sentence of 20 years in prison on five charges and a maximum sentence of five years on the other two charges.
This creates a potential maximum sentence of 110 years, and although it is unlikely that the judge will actually impose it, Bankman-Fried is expected to face a sentence that could last for decades.
When FTX went bankrupt last November, Alameda owed the company $8 billion (£6.5 billion).
Assistant U.S. Attorney Nicholas Ross said in his closing arguments, “He took the money. He knew it was wrong. He did it anyway, because he thought he was smarter and better and he wanted to get out of it.” Could.”
Bankman-Fried took the risky step of taking the stand in her own defense, leading jurors to believe that prosecutors had failed to prove that she had acted with criminal intent.
“It was a bad decision,” said Mr. Cohen, his lawyer, painting the picture of an idiot mathematician who was overwhelmed by the rapid growth of his companies.
“That does not constitute a crime.”
Bankman-Fried defended the money transfers between his firms as “permitted” and testified that he was largely unaware of the financial hole described by his representatives until just weeks before the FTX collapse last year.
The fallout left many customers unable to get their funds back.
Lawyers working on the bankruptcy case have since said they have recovered the bulk of the missing money.
The Bankman-Fried trial was closely watched for its impact on the crypto industry as a whole, which has failed to recover from last year’s market turmoil.
He has been seen as a poster child for the problems in the sector, which America’s top regulators have described as rife with criminality.
Before the collapse of his companies, he was known for socializing with celebrities and making frequent appearances in Washington and the media to discuss the sector.
FTX’s rapid growth and his deal-making last year, when the market downturn hit other crypto firms, earned him the nickname “King of Crypto.”
With Congress unlikely to pass new regulations for crypto anytime soon, Mr. Mariotti said he expected US courts to remain the venue for battles over the industry.
“I really think that having specific crypto regulations in the United States would reduce the crime that occurs in this particular case,” he said.
“Sadly, I don’t think we’re going to see regulation in the very short term… but it certainly means that in the courts and civil cases filed by the SEC [Securities and Exchange Commission] and the CFTC [Commodity The fight will continue. Futures Trading Commission]” he added, referring to US financial regulatory agencies.
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