FTX Founder Sam Bankman-Fried Convicted on Fraud and Conspiracy Charges
In a landmark verdict, a federal jury has found FTX founder, Sam Bankman-Fried, guilty on seven counts of fraud and conspiracy related to the collapse of the cryptocurrency company. The charges carry a maximum prison term of 110 years, as stated by federal prosecutors. The verdict was reached after a trial lasting just over a month in federal court in New York City.
The U.S. government alleged that Bankman-Fried, 31, orchestrated a scheme that cheated investors and customers out of over $10 billion through FTX and his crypto trading firm, Alameda Research. This high-profile case has garnered widespread public interest and has even attracted attention from Hollywood, with plans for documentaries and potential movie or TV adaptations in the works.
Prosecutors argued that Bankman-Fried, also known as “SBF,” executed a “wide-ranging scheme” to misappropriate customer funds and mislead investors and lenders. Throughout the trial, Bankman-Fried maintained his innocence, testifying over four days that he never committed fraud and never intended to defraud FTX’s customers.
Bankman-Fried’s sentencing hearing is scheduled for March 28, 2024. Following the jury’s verdict, U.S. Attorney Damian Williams of the Southern District of New York emphasized the gravity of the case, stating, “Sam Bankman-Fried perpetrated one of the biggest financial frauds in American history.”
FTX’s collapse followed a November 2022 article by CoinDesk, which revealed a balance sheet for Alameda Research heavily reliant on tokens issued by sister company FTX, leading to a run on FTX’s assets. Bankman-Fried was arrested in the Bahamas in December 2022 and subsequently extradited to the U.S. He was released on a $250 million bond with electronic monitoring, with a requirement to stay at his parents’ residence in Palo Alto, Calif.
On November 2, Bankman-Fried was convicted of wire fraud conspiracy, wire fraud, conspiracy to commit money laundering, conspiracy to commit commodities fraud, and conspiracy to commit securities fraud. Each count carries a maximum sentence ranging from 5 to 20 years in prison.
Once lauded as a visionary in global financial circles, Bankman-Fried’s net worth was estimated at over $30 billion at its peak after the launch of FTX in 2019. However, the trial shed light on alleged misconduct within the company. Bankman-Fried’s defense portrayed him as an enterprising entrepreneur who made mistakes due to inexperience, but the jury sided with the prosecution, considering the testimonies from several witnesses.
Notable investors in FTX included Endeavor’s IMG sports division, NFL quarterback Tom Brady, and New England Patriots owner Robert Kraft. Major shareholders included Third Point, Paradigm, Sequoia Capital, and Coinbase, among others. Following the collapse, celebrity spokespeople, including Larry David, Tom Brady, and others, were named in a proposed class-action lawsuit for allegedly encouraging consumers to invest in the crypto exchange.