Sam Bankman-Fried has been found guilty in the FTX cryptocurrency fraud case

Founder of FTX Sam Bankman Fried He was found guilty of all seven counts of fraud, conspiracy and money laundering after more than two weeks of testimony in one of the most high-profile financial crimes cases in years.

The 31-year-old former cryptocurrency billionaire was found guilty of two counts of wire fraud conspiracy, two counts of wire fraud, and one count of conspiracy to commit money laundering, charges that each carry a maximum penalty of 20 years in prison. He was also convicted of conspiracy to commit commodities fraud and conspiracy to commit securities fraud, each carrying a maximum sentence of five years.

“Sam Bankman-Fried committed one of the largest frauds in American history, a multi-billion-dollar scheme designed to make him the king of cryptocurrencies,” Damian Williams, US Attorney for the Southern District of New York, said in a press conference following the incident. Judgment. “Here’s the thing: The cryptocurrency industry may be new. Players like Sam Bankman Fried may be new. This kind of fraud, this kind of corruption, is as old as time, and we have no patience for it.”

The MIT graduate has maintained his innocence since his arrest late last year following the stunning collapse of FTX, the cryptocurrency exchange he co-founded, amid an $8 billion shortfall in funds and allegations that he used client money to shore up his faltering hedge fund. Alameda Research.

Freed Bankman’s attorney, Mark S. Cohen, in a statement: “We respect the jury’s decision. But we are extremely disappointed in the outcome. Mr. Bankman-Fried maintains his innocence and will continue to vigorously fight the charges against him.” for him.”

Bankman-Fried is accused of using some of that money to purchase real estate, make political contributions, and fund pet charitable projects, among other purposes unrelated to FTX’s business of allowing people to buy and trade digital currencies.

More broadly, FTX Bankruptcy in November 2022 It cast a pall over the entire cryptocurrency industry, as the sudden collapse of other major players in the industry evaporated billions in customer wealth.

As the verdict was read, Bankman-Fried stood frozen facing the jury. His parents, sitting in the courtroom, hugged each other and watched closely.

It was a stunning, supersonic fall for a man who, according to his lawyer, still believes his billion-dollar empire was solvent twelve months ago.

“A lot of people believed in him. He was a genius,” Natalie Tian, ​​a former FTX employee, told CBS News.

Tian said attending her former boss’s trial was healing after she suffered months of confusion and depression when his empire collapsed and she too lost a lot of money.

“Sam Bankman-Fried believed he was above the law,” US Attorney Merrick Garland said in a statement. “Today’s ruling proves he was wrong. This case should send a clear message to anyone who tries to hide their crimes behind a shiny new thing that they claim no one else is smart enough to understand: The Department of Justice will hold you accountable.”

Attorney Bankman-Fried and federal prosecutors Provide closing arguments He appeared before a jury in New York City on Wednesday after more than four weeks of testimony.

Witnesses for the prosecution include Carolyn Ellison, Nishad Singh and Gary Wang, all of whom previously worked for Bankman-Fried at FTX or Alameda and all of whom pleaded guilty to multiple charges including participating in an alleged scheme to defraud millions of customers.

The three accused him of organizing the use of FTX clients’ funds to make purchases ranging from a luxury apartment in the Bahamas to covering losses at Alameda, Bankman-Fried’s cryptocurrency hedge fund.

Ellison testified that Bankman-Fried directed her to withdraw funds from FTX clients’ accounts to fund investments and trading strategies at Alameda, where she was CEO until its collapse, and FTX. Wang, FTX’s co-founder, detailed how he and the defendant engaged in financial crimes and lied about them, while Singh, FTX’s former engineering director, detailed how Bankman-Fried spent FTX’s money.

Defense attorneys sought to portray Bankman-Fried as a math geek who made poor management decisions at FTX, but did not have anything criminal in mind while building his cryptocurrency empire.

In the end, it was perhaps the arrogant display during Bankman-Fried’s testimony that carried the most weight, and did the most damage. Under prosecutorial questioning, Bankman-Fried said “more than 140 times” that he could not remember a document, conversation or other key details. The government repeatedly said it was because “he was lying.”

Bankman-Fried testified that he believed Alameda’s spending came from corporate money, not customer money, and that any mistakes he made were not in bad faith. The goal of FTX was to “move the ecosystem forward,” he testified during the proceedings. “It turns out the opposite.”

It is now up to Judge Louis Kaplan to determine what punishment Bankman-Fried will impose. While the legal minimum for charges is 110 years, and the sentencing guidelines provide some type of formula, the judge has broad discretion to sentence under those guidelines. However, if Judge Kaplan “believes the defendant was committing perjury in the courtroom, he may exceed the guidelines,” says CBS News legal analyst Ricky Kleiman.

For her part, Tian, ​​the former FTX employee, said that a prison sentence could be too harsh, wondering if Bankman-Fried could instead help the government investigate other possible cryptocurrency trading scams.

The upcoming trial in the saga of United States vs. The Sam Bankman-Fried hearing is scheduled for March 11, 2024, when other charges not filed by the government will be consolidated into another lawsuit.

This experiment ends almost a year to the day that FTX stopped allowing customers to withdraw deposits, marking the beginning of the end of the so-called meteoric rise of the cryptocurrency king.