The former cryptocurrency mogul, Sam Bankman-Fried, has been convicted of fraud by a New York jury on November 2nd, marking the culmination of a trial where he defended himself against allegations of serious misconduct in managing his cryptocurrency exchange FTX and trading firm Alameda Research.
After a trial lasting over a month, the jury deliberated for four and a half hours before rendering a verdict, finding Bankman-Fried guilty on all seven charges, which included wire fraud, conspiracy to commit wire fraud, and conspiracy to commit money laundering. He is scheduled to be sentenced by Judge Lewis Kaplan on March 28th of the following year and could potentially face a lengthy prison term.
Bankman-Fried established FTX in 2019, and its valuation soared dramatically during the cryptocurrency surge following the COVID-19 pandemic. However, prosecutors contended that the operation had been fraudulent from the outset. Despite promoting the exchange as safe and secure to investors and the public, Bankman-Fried's former associates testified that the company had manipulated numbers and granted undisclosed privileges to Alameda Research, including extending a $65 billion line of credit and allowing Alameda to dip into negative balances by illicitly borrowing FTX customer funds.
The downfall of the FTX empire began with a November 2022 Coindesk article, published exactly one year before the jury's verdict, which exposed the covert mingling of funds. Additionally, Binance CEO Changpeng "CZ" Zhao announced his intention to disassociate from the exchange, leading to Bankman-Fried's resignation and FTX filing for bankruptcy. Subsequently, he faced both civil and criminal charges related to fraud and money laundering.
Prior to his trial, Bankman-Fried had a contentious relationship with prosecutors and the court. Initially placed under house arrest, he was incarcerated in August for violating his bail conditions, which included using a VPN to watch a football game and disclosing his ex-girlfriend's diary entries – former Alameda Research CEO Caroline Ellison, who had pleaded guilty to federal charges and testified against him during the trial.
His case has further damaged the reputation of the already beleaguered cryptocurrency industry, given Bankman-Fried's prominence as a high-profile figure within the sector. Numerous other prominent companies both in the United States and abroad are currently facing civil and criminal charges, some of which have suffered abrupt collapses similar to FTX's.
During the trial, Bankman-Fried's defense contended that he had genuinely struggled to manage a high-risk business. He denied direct oversight of the controversial code updates that allowed Alameda to access FTX funds and claimed he had not been involved in trading activities or questioned employees about the missing billions of dollars. Nevertheless, his testimony contradicted that of Ellison, his former roommates Adam Yedidia and Gary Wang (the co-founder of FTX), and family friend Nishad Singh, all of whom had worked under Bankman-Fried and later cooperated with prosecutors. Wang, Singh, and Ellison are currently awaiting sentencing.
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