Crypto Luminary Sam Bankman-Fried Found Guilty of Embezzlement
Former Crypto Whiz Sam Bankman-Fried Convicted of Massive Embezzlement
Sam Bankman-Fried, the former cryptocurrency luminary accused by US prosecutors of embezzling billions of dollars from his customers, was declared guilty on all charges on Thursday and now faces a potential sentence of up to 110 years in prison.
The jury swiftly arrived at its verdict after a five-week trial held in New York, taking just five hours for deliberation. Bankman-Fried, known in the crypto world as “SBF,” will be sentenced on March 28, 2024.
US Attorney Damian Williams released a statement following the verdict, characterizing Bankman-Fried’s actions as “one of the largest financial frauds in American history, a multi-billion dollar scheme designed to establish him as the king of crypto.”
Williams added, “The cryptocurrency industry may be relatively new, and figures like SBF may be emerging, but this type of fraud and corruption has existed throughout history, and we have no tolerance for it.”
Mark Cohen, the attorney representing Bankman-Fried, expressed disappointment with the outcome, stating, “Mr. Bankman-Fried maintains his innocence and will continue to vigorously defend himself against the charges.”
Bankman-Fried, who graduated from the Massachusetts Institute of Technology (MIT) and became a billionaire before turning 30, rapidly ascended in the cryptocurrency realm. He transformed FTX, a startup he co-founded in 2019, into the world’s second-largest cryptocurrency exchange platform.
However, in November 2022, the FTX empire collapsed due to the inability to handle substantial withdrawal requests from customers who discovered that some of their funds at the company had been utilized for high-risk ventures in Bankman-Fried’s personal hedge fund, Alameda Research.
During the trial, some of Bankman-Fried’s close associates testified that he played a central role in decisions that led to the disappearance of $8 billion from his FTX trading platform.
In their closing arguments, prosecutors portrayed the defendant as a highly intelligent individual driven by greed who knowingly diverted FTX funds to Alameda in secret.
The defense countered by claiming that their client had acted in “good faith” and had been overwhelmed by circumstances and the financial incompetence of associates who testified against him in exchange for leniency from prosecutors.
The key witness in the trial was Caroline Ellison, the former CEO of Alameda and Bankman-Fried’s on-again, off-again girlfriend. She alleged that they had misappropriated “approximately $14 billion” from FTX clients and that Bankman-Fried, as Alameda’s owner, had “instructed me to commit those crimes.”
The misappropriated funds were allegedly used for venture capital investments, political contributions, luxury real estate in the Bahamas, and payments to celebrities, including Tom Brady and Gisele Bundchen, for endorsing FTX. The money also contributed to the acquisition of naming rights for the Miami Heat’s home arena.
According to prosecutors, over $8 billion of customer funds had been invested in ill-fated ventures at Alameda by the time FTX collapsed.
During his trial, Bankman-Fried acknowledged making “mistakes” but vehemently denied attempting to defraud anyone.
Prosecutor Nicholas Roos argued before the jury that they must determine whether “the defendant knew that taking the money was wrong.”
“He knew it was wrong. He did it anyway and believed that his intelligence would allow him to escape scrutiny,” Roos asserted.
Roos emphasized that three witnesses, including Ellison and other close associates, had all claimed that the former cryptocurrency prodigy had directed Alameda to drain FTX’s coffers, virtually without limits.
The cryptocurrency world was shaken by the sudden collapse of FTX and is now in the early stages of recovery.
Highlighting the significance of the case, US Attorney General Merrick Garland issued a statement following the verdict, commending the prosecutors and the FBI for their “outstanding work in bringing Mr. Bankman-Fried to justice.”
Garland concluded, “This case should serve as a clear message to anyone attempting to conceal their crimes behind a seemingly complex concept: the Justice Department will hold you accountable.”