"Sam Bankman-Fried perpetrated one of the biggest financial frauds in American history - a multibillion-dollar scheme designed to make him the king of crypto," US attorney Damian Williams said in a statement after the verdict.
ADVERTISEMENTThe fallen crypto wunderkind Sam Bankman-Fried, who founded one of the largest crypto exchanges, has been found guilty of all seven criminal counts against him. The FTX founder faces a maximum sentence of 115 years in prison on charges of fraud and money laundering.
A New York jury convicted him of wire fraud and conspiracy to commit wire fraud against FTX customers and against lenders of its sister hedge fund Alameda Research lenders.
"Sam Bankman-Fried perpetrated one of the biggest financial frauds in American history - a multibillion-dollar scheme designed to make him the king of crypto," US attorney Damian Williams said in a statement after the verdict.
"This case has always been about lying, cheating and stealing, and we have no patience for it," he added.
The charges carry potential penalties adding up to 115 years in prison. Bankman-Fried is likely to face far less than the maximum at a sentencing set for March 28.
The 31-year-old pleaded not guilty to the accusations and said during his testimony that he never committed fraud or meant to cheat customers before FTX, once the world’s second-largest crypto exchange, collapsed into bankruptcy a year ago.
A warning to crypto fraudsters
As the verdict was read, Bankman-Fried seemed stunned, appearing stone-faced, his hands clasped before him, as his lawyers remained sitting beside him. When he sat down, he looked down for several minutes.
His lawyer, Mark Cohen, later read a statement outside court to say “Mr. Bankman Fried maintains his innocence and will continue to vigorously fight the charges against him,” Cohen said.
US Attorney Damian Williams said the case should serve as a warning to every other fraudster who “thinks they're untouchable, that their crimes are too complex,” that they are too powerful to prosecute or can talk their way out of their crimes because “I promise we'll have enough handcuffs for all of them.”
Private jet, Super Bowl and Katy Perry
The prosecution of Bankman-Fried puts a spotlight on the **emerging industry of cryptocurrency**and a group of young executives in their 20s who lived together in a $30 million (€28 million) luxury apartment in the Bahamas as they dreamed of becoming the most powerful player in a new financial field.
Prosecutors made sure jurors knew that the defendant they saw in court with short hair and a suit was not the man with big messy hair and shorts that became his trademark appearance after he started his cryptocurrency hedge fund, Alameda Research, in 2017 and FTX, his cryptocurrency exchange, two years later.
They showed the jury pictures of Bankman-Fried sleeping on a private jet, sitting with a deck of cards and mingling at the Super Bowl with celebrities including the singer Katy Perry.
The government relied heavily on the testimony of three former members of Bankman-Fried’s inner circle, his top executives including his former girlfriend, Caroline Ellison, to explain how Bankman-Fried used Alameda Research to siphon billions of dollars from customer accounts at FTX.
The inner circle turns against him
With that money, prosecutors said, the Massachusetts Institute of Technology graduate gained influence and power through investments, contributions, tens of millions of dollars in political contributions, Congressional testimony and a publicity campaign that enlisted celebrities like comedian Larry David and football quarterback Tom Brady.
Ellison, 28, testified that Bankman-Fried directed her while she was chief executive of Alameda Research to commit fraud as he pursued ambitions to lead huge companies, spend money influentially and run for US president someday. She said he thought he had a 5 per cent chance to eventually be US president.
Becoming tearful as she described the collapse of the cryptocurrency empire last November, Ellison said the revelations that caused customers collectively to demand their money back, exposing the fraud, brought a “relief that I didn’t have to lie anymore.”
FTX co-founder Gary Wang, who was also chief technology officer, revealed in his testimony that Bankman-Fried directed him to insert code into FTX’s operations so that Alameda Research could make unlimited withdrawals from FTX and have a credit line up to $65 billion (€61 billion). Wang said the money came from customers.
Nishad Singh, the former head of engineering at FTX, testified that he felt “blindsided and horrified” at the result of the actions of a man he once admired when he saw the extent of the fraud. He said the collapse last November left him suicidal.
ADVERTISEMENTEllison, Wang and Singh all pleaded guilty to fraud charges and testified against Bankman-Fried in the hopes of leniency at sentencing.
'A different person'
Bankman-Fried was arrested in the Bahamas last December and extradited to the United States, where he was freed on a $250 million (€235 million) personal recognisance bond with electronic monitoring and a requirement that he remain at the home of his parents in Palo Alto, California.
His communications, including hundreds of phone calls with journalists and internet influencers, along with emails and texts, eventually got him in trouble when the judge concluded he was trying to influence prospective trial witnesses and ordered him jailed in August.
During the trial, prosecutors used Bankman-Fried’s public statements, online announcements and his Congressional testimony against him, showing how the entrepreneur repeatedly promised customers that their deposits were safe and secure as late as last November 7 when he tweeted “FTX is fine. Assets are fine” as customers furiously tried to withdraw their money. He deleted the tweet the next day. FTX filed for bankruptcy four days later.
In his closing, Roos mocked Bankman-Fried’s testimony, saying that under questioning from his lawyer, the defendant’s words were “smooth, like it had been rehearsed a bunch of times?”
ADVERTISEMENTBut under cross-examination, “he was a different person,” the prosecutor said. “Suddenly on cross-examination, he couldn’t remember a single detail about his company or what he said publicly. It was uncomfortable to hear. He never said he couldn’t recall during his direct examination, but it happened over 140 times during his cross-examination.”
Former federal prosecutors said the quick verdict — after only half a day of deliberation — showed how well the government tried the case.
This story has been updated.
