Sam Bankman-Fried’s fraud trial has ended with a guilty verdict for the crypto tycoon and the possibility that he spends decades behind bars.
On Thursday, a New York federal court jury found Bankman-Fried guilty on all seven charges for fraud and conspiracy that were filed against him. The proceedings began on October 3, almost a year after his $32bn empire of FTX Trading and Alameda Research collapsed.
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Although Bankman-Fried admitted to making mistakes in how he ran FTX, he pleaded not guilty to the charges even as three former top executives testified against him.
Here’s what to know about the verdict and its impact.
Who is Sam Bankman Fried?
Bankman-Fried co-founded FTX, a cryptocurrency exchange, in 2019 with former Google employee Gary Wang. He had also founded the company’s partner hedge fund, Alameda Research, in 2017.
The now ex-CEO debuted on the Forbes billionaires list just two years after starting FTX. By the end of 2021, Forbes estimated his net worth at $26bn.
On November 11, 2022, FTX filed for bankruptcy and Bankman-Fried resigned as CEO.
Bankman-Fried is a Massachusetts Institute of Technology graduate in physics and held a Wall Street job before quitting to start FTX. The 31-year-old’s parents are Stanford law professors.
When will Bankman Fried be sentenced?
Bankman-Fried is scheduled for a sentencing hearing on March 28, 2024.
Although the penalties of his charges may add up 110 years, the exact duration will be determined at the hearing, according to the Associated Press news agency.
He is expected to remain in a Brooklyn jail while he awaits sentencing. Bankman-Fried was imprisoned there in August after being accused of witness tampering in the leadup to the trial’s opening.
The former businessman will also be facing a second trial in March 2024 on five additional charges, including bribery.
What was Sam Bankman-Fried found guilty of?
Described as one of the biggest financial frauds on record, the case found Bankman-Fried guilty of seven charges involving fraud, money laundering and conspiracy to commit these crimes.
Stealing customer funds:
- One count of wire fraud: This is when someone uses electronic communications for a criminal act.
- Two counts of conspiracy to commit fraud: This entails that at least one other person collaborated in the crime, which in this case were his former executives who pleaded guilty in hopes of a lighter sentence.
- One count of conspiracy to commit commodities fraud: This involves illegal activity around the purchase and sale of commodities such as crypto.
Caroline Ellison, his former girlfriend and the ex-CEO of Alameda Research, pleaded guilty and testified against Bankman-Fried for being directed to steal money from customers.
Lying to investors and lenders:
- One count of wire fraud.
- Two conspiracy counts over misrepresentations to investors and lenders.
There was also an additional count of money laundering which is defined by the United States government as disguising financial assets to conceal the illegally activity that produced them.
The jury convicted him of fraud for stealing at least $10bn from customers and investors. They also rejected his claim that he never meant to commit these crimes.
Can Bankman-Fried appeal?
He is likely to ask the 2nd US Circuit Court of Appeals to review his conviction, as well as rulings against him before and during the trial, according to Reuters.
Bankman-Fried’s lawyer 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 charges against him,” he said.
Does this affect the crypto industry?
Bloomberg reported that crypto markets dipped after the verdict although losses have been mostly contained.
The verdict could also give the broader cryptocurrency business a long-awaited chance to move forward, according to Reuters.
Federal prosecutor Damian Williams said that Bankman-Fried’s conviction delivered on his promise of “rooting out corruption in our financial markets” and sends a warning to any fraudster who thinks they are untouchable to “think again, and cut it out”.