New York
CNN
—
Sam Bankman was Fried sinner Thursday for his role in the collapse of cryptocurrency exchange FTX.
After 15 days of testimony and approximately four and a half hours of deliberation, The jury returned the verdict Which found him guilty of seven counts of fraud and conspiracy.
Bankman-Fried appeared overwhelmed as the verdict was read. After the jury was released, he stood with his head bowed and trembling as his lawyer spoke in his ear. A few feet behind him, his parents stood watching. When Bankman-Fried was escorted out of the room, he turned and smiled at his parents. His fatherJoe Bankman put his arm around his wife’s shoulders. When their son left the room, Barbara Fried broke down in tears.
In remarks outside a Manhattan courtroom on Thursday, U.S. Attorney Damien Williams praised the jury’s verdict, saying the government had “no patience” for fraud and corruption.
“These players like Sam Bankman-Fried may be new, but this kind of fraud, this kind of corruption, is as old as time,” he said.
But Bankman-Fried’s lawyer said they were “disappointed.”
“We respect the jury’s decision. But we are extremely disappointed with the outcome,” lead defense attorney Mark Cohen said in a statement. “Mr. Bankman-Fried maintains his innocence and will continue to vigorously fight the charges against him.
His sentencing hearing will be March 28, 2024. He faces up to 110 years in prison.
It was Bankman Fried sinner By stealing billions of dollars from accounts belonging to clients of the once highly successful cryptocurrency exchange FTX. He was also convicted of defrauding the lenders of FTX’s sister company, hedge fund Alameda Research, which held FTX clients’ money in a bank account.
During his trial, Bankman-Fried said he learned in 2020 that FTX client funds were being held at Alameda but took no action to protect them.
When it was later discovered in the fall of 2022 that Alameda owed $8 billion to FTX, no one was fired.
Other charges for which Bankman-Fried was convicted include defrauding investors at FTX and one count of money laundering.
The ceiling of the ruling A A year-long odyssey That transformed 31-year-old Bankman-Fried from a billionaire living in a luxury apartment in the Bahamas into a defendant in one of the biggest white-collar crime cases since Bernie Madoff’s Ponzi scheme collapsed in 2009.
FTX was once one of the most trusted names in the cryptocurrency space. The trial has been closely watched by regulators, investors and the cryptocurrency community for signs of a potential larger crackdown on the largely unregulated cryptocurrency market.
The ruling comes a year after FTX entered a death spiral that sparked panic in the trillion-dollar cryptocurrency industry and left an estimated 1 million customers facing potential losses. Before its collapse, the exchange attracted millions of users and a host of A-list backers, such as Tom Brady and Gisele Bündchen.
FTX, founded by Bankman Fried in 2019, describes itself as a safe and easy way to start trading cryptocurrencies — digital assets whose values depend largely on the collective hope of their future application, which remains murky.
In early 2020, with interest rates dropping to zero and millions of amateur investors staying at home, FTX’s popularity as a cryptocurrency gateway skyrocketed. By 2022, FTX was airing Super Bowl ads and plastering its name on the Miami Heat arena.
But FTX collapsed into bankruptcy on November 11, 2022 after what was effectively a bank run – a customer panic sparked by a leaked document that suggests… Irregular financial transactions Between FTX and another company owned by Bankman-Fried.
But, unlike bank customers, FTX depositors had no federal insurance fund to compensate them when cash dried up. Despite FTX’s public assertions that it did not invest or move customer deposits in any way, another firm, Bankman-Fried, has been secretly withdrawing deposits to repay its lenders, underwrite the luxury lifestyles of executives, gamble in cryptocurrency markets, and transfer millions of dollars. In American political campaigns.
That other company was Alameda Research, the hedge fund-like cryptocurrency trading house that Bankman-Fried launched in 2017.
Almost as soon as FTX was created in 2019, Bankman-Fried ordered co-founder Gary Wang and CTO Nishad Singh to modify the platform’s code to allow Alameda, as a client of the exchange, some of the “special privileges” enjoyed by other clients. Lacking, according to Wang’s testimony.
Wang and Singh both pleaded guilty to financial crimes as part of a plea deal with the government.
These perks included an almost unlimited line of credit to Alameda, which its executives could tap at any time, Wang testified. Alameda’s main trading account was also given a “allow negative” tag, meaning it could incur a negative balance without repercussions — a privilege no other FTX client was granted, Wang testified.
Over the four weeks of his trial, Bankman Freed watched a parade of people he once considered his closest confidantes testify against him. Among them were friends from Math Camp and MIT who became its co-founders; And most importantly, his ex-girlfriend and trusted business advisor, 28 year old Carolyn Ellison.
The most damning evidence against Bankman-Fried came from Ellison, who testified for the prosecution over three days.
As Alameda’s CEO and Bankman-Fried’s romantic partner for two years, Ellison was in a unique position to comment on what was happening within the inner circle of Alameda and FTX executives, many of whom lived together in a $30 million luxury apartment in the United States. Bahamas.
Ellison’s sometimes emotional testimony provided an account of events in which nearly every decision at both Alameda and FTX came down to Bankman-Fried, who founded both companies and was their majority owner. A common refrain from Ellison, when asked who directed her to carry out various acts, criminal or otherwise, was a variation on the phrase “Sam did.”
In the face of A A group of high-level witnesses Allied against him, Bankman-Fried’s defense was challenged from the start.
During the trial, the defense attorney appeared to falter in cross-examining these witnesses.
Lawyers usually advise their clients in criminal cases not to testify, because doing so exposes them to potential questioning by prosecutors. But many legal experts said the Bankman-Fried case was an exception. He no longer had allies to confront the business partners who had turned against him. Taking the stand was a Hail Mary, the kind of high-stakes stunt on which Bankman-Fried built his career.
“Bankman-Fried has a great appetite and tolerance for risk,” said Howard Fisher, a partner at the law firm Moses Singer and a former SEC attorney.
“Testimony is hard work. It’s not just getting the details of the story right, but learning how to present yourself under questioning and handle the stress of cross-examination,” Fisher said. “Optimally, one might want to engage in months of training in front of Mock juries before taking the stand.”
But preparations for Bankman-Fried’s trial were significantly complicated after Judge Lewis Kaplan revoked bail in August, after prosecutors said the defendant leaked documents about Ellison to the New York Times. It was the final straw, following other cases of alleged witness tampering, for Kaplan, who returned Bankman-Fried to a federal prison in Brooklyn, New York, where his access to lawyers was severely limited.
Judge Lewis Kaplan set Sam Bankman-Fried’s sentencing hearing for March 28. He is expected to remain in federal prison in Brooklyn while awaiting sentencing.
His legal headache is not over yet.
A second trial on five additional charges that were separated from these proceedings is scheduled for March, although Judge Kaplan asked prosecutors to decide by February 1 whether that trial will continue.
The jury deliberated for just under five hours before returning a verdict.
Sam Bankman Fried’s parents sat in the second row of the kitchen and hugged each other tightly as they read each issue.
As the word “guilty” was read aloud, Joseph Bankman stuck his head deeper and deeper into his lap.
Barbara put her arm around Fred and continued to squeeze his shoulder, as he had done to her.
Her jaw trembled and she pressed her palms to her cheeks as she listened to the ruling, staring directly at her son with her eyes frowning downward.
As people began to file out of the courtroom, Bankman-Fried’s parents turned toward him. Lead defense attorney Mark Cohen motioned for them to wait, while speaking to Bankman-Fried.
Bankman-Fried did not turn to see his parents until he was close to the exit door and gave them a sad smile when Barbara Fried beat her hand to her chest over her heart, then sunk her face into Joseph Bankman’s shoulder.
“Devoted student. Bacon advocate. Beer scholar. Troublemaker. Falls down a lot. Typical coffee enthusiast.”