In a pivotal moment for the crypto world, news: Sam Bankman Fried, former CEO of FTX, has been found guilty by the jury at his trial of all counts of high-risk fraud.
The verdict comes a year after the catastrophic collapse of FTX, its cryptocurrency exchange, and its affiliated hedge fund, Alameda Research, which caused a series of shake-ups in the industry.
Summary
Crypto news:Former crypto visionary Sam Bankman-Fried found guilty in FTX fraud trial
Sam Bankman-Fried, once celebrated as a cryptocurrency genius, has been found guilty on all counts in a fraud trial related to his cryptocurrency exchange, FTX, and affiliated hedge fund, Alameda Research.
The verdict comes a year after the collapse of FTX, which had devastating consequences for thousands of customers.
The charges against Bankman-Fried were extensive and included seven counts of wire fraud, securities fraud, and money laundering, all stemming from the alleged fraud against FTX customers and lenders associated with Alameda Research.
The guilty verdict was handed down around 7:40 PM ET after four hours of deliberations by a Manhattan federal jury.
Damian Williams, US Attorney for the Southern District of New York, described Bankman-Fried’s actions as “one of the biggest financial frauds in American history.”
He pointed out that although the cryptocurrency industry is relatively new, fraud and corruption are ancient problems.
The potential consequences for Bankman-Fried are severe, with a maximum sentence of up to 110 years in prison. Sentencing is scheduled for March 28, further confirming the severity of the sentence.
The collapse of FTX and Alameda in November 2022 was catalyzed by the exposure of significant financial liabilities, raising concerns about Alameda’s financial activities.
In particular, Alameda had absorbed substantial sums from FTX’s clients, and a substantial portion of Alameda’s balance sheet consisted of digital currency assets it had generated.
This crucial financial detail played a central role in the case against Bankman-Fried.
The trial that led to the guilt of Sam Bankman Fried
The revelations about FTX’s financial situation prompted many of its clients to rush to withdraw their funds, effectively triggering a run on the branches.
The value of Alameda’s investments plummeted and FTX was unable to return a significant portion of the money, which had been funneled to Alameda.
In addition, substantial sums went to sponsorships, advertising, and loans to high-level executives, further aggravating the legal case against Bankman-Fried.
Several high-level people within FTX and Alameda were charged after the companies disappeared.
Former Alameda CEO Caroline Ellison, FTX co-founder Gary Wang, and FTX engineering manager Nishad Singh pleaded guilty and agreed to cooperate with the prosecution in exchange for leniency.
Although Bankman-Fried testified in his own defense, his testimony appeared to carry less weight than that of the insider witnesses who testified against him.
During cross-examination, he allegedly responded with “I don’t remember” as many as 140 times. His legal team argued that he had no intention of defrauding anyone and that the government was looking for a scapegoat for the FTX and Alameda failures.
Bankman-Fried’s emotional detachment was palpable as he read the guilty verdicts in court, while his family showed a range of emotions.
Mark S. Cohen, his attorney, expressed respect for the jury’s decision but also disappointment, emphasizing Bankman-Fried’s continued assertion of innocence and his determination to vigorously fight the charges against him.
Before the legal troubles, Forbes had estimated Bankman-Fried’s holdings in Alameda and FTX to be worth as much as $26 billion, at just 29 years old.
The conclusions about the affair
However, bankruptcies wiped out this wealth, and criminal charges soon followed.
Bankman-Fried also faces another trial on bribery of foreign officials and other charges. The trial will begin in March and he has pleaded not guilty to all charges.
In the aftermath of this momentous verdict, prosecutor Damian Williams issued a stern warning to those planning to engage in fraudulent activities in the cryptocurrency industry.
He stated:
“This case is a warning to all fraudsters who think they are untouchable or that their crimes are too complex to be discovered… Those people should think again.”
This conviction is a clear signal that the legal system is ready to hold even the most influential figures in the cryptocurrency world accountable for their actions.
