FTX founder Sam Bankman-Fried was found guilty Thursday of orchestrating one of the biggest frauds in U.S. history and could sentenced to more than 100 years behind bars.
A New York jury of nine women and three men found the 31-year-old son of two Stanford legal scholars guilty of seven federal charges including wire fraud, securities fraud, and money laundering connected to the collapse of his cryptocurrency exchange and related hedge fund Alameda Research.
The disgraced entrepreneur who had been partying with pop stars like Katy Perry and her actor husband Orlando Bloom just a year ago may be spending the rest of his life in a federal penitentiary when he is sentenced. Judge Lewis Kaplan of Manhattan federal court will decide the ultimate length of his sentence, with the sentencing date scheduled for March 28, 2024.
After the verdict was delivered to a packed courtroom, Bankman-Fried’s mother, Barbara Fried, who had attended every day of the trial, put her head in her hands and stifled tears, according to the New York Times. Her son nodded at Barbara and his father Joe Bankman, as he left the courtroom.
Speaking outside court after the verdict, U.S. Attorney Damian Williams said although the cryptocurrency industry had been around a relatively short period, “this kind of corruption is as old as time.”
The government accused Bankman-Fried of stealing $8 billion in customer funds to live an extravagant lifestyle that included a sprawling penthouse in the Bahamas. He also used the money to buy himself “power and influence” on Capitol Hill and then lied to cover his tracks. After the exchange, which was once valued at $32 billion, failed in 2022, thousands of customers were unable to get their money back, and the government turned its case against Bankman-Fried and his top lieutenants into a referendum on the loosely regulated but highly volatile crypto industry.
The government’s case against him was a lot stronger than anticipated and included a parade of his closest confidants who testified that he called the shots and demanded they break the rules too if they wanted to keep getting paid.
The prosecution called 16 witnesses over the course of two weeks, though they had a lot more on their initial list. The defense called three witnesses, including Bankman-Fried – a decision that seemed to do him more harm than good in the long run.
Prosecutors chipped away at his credibility on the stand and cornered him into making multiple contradictions like claims he had no idea about the misappropriation of customer funds until just a few months before the exchange collapsed. He also pinned much of the day-to-day responsibilities on his co-founders Gary Wang, and Nishad Singh, and former Alameda CEO Caroline Ellison.
Wang, Singh, and Ellison, who used to be Bankman-Fried’s girlfriend, all pleaded guilty to similar charges and worked with prosecutors in their case against Bankman-Fried.
Wang, former chief technology officer for FTX who met Bankman-Fried at math camp, testified his former friend instructed him to change FTX’s code so that Alameda Research, the trading firm Bankman-Fried owned and Ellison ran, could have a negative balance. That meant, Alameda could borrow billions from FTX. Wang said that Alameda also had a $65 billion line of credit.
Singh, the former head of engineering who went to prep school with Bankman-Fried’s younger brother, Gabriel, testified FTX made illegal political donations in employee names using stolen funds. He also testified he was instructed by Bankman-Fried to lie about FTX’s revenue.
Ellison, the government’s star witness and considered to be Bankman-Fried’s closest cohort, testified she had personally shown him several spreadsheets over the course of a year that predicted a crypto crash could wipe out Alameda, which, at the time, was “borrowing” billions of dollars from FTX customers.
She also provided insight into his private life that included a look at the comically wild schemes hatched by Bankman-Fried and other top executives to keep the companies solvent, which included bribing Chinese officials and Thai prostitutes.
She also testified about his personal grooming habits and sloppy dress code, which she claimed was part of a carefully crafted public relations strategy to make the former billionaire seem more approachable.
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Ellison provided details of their love affair and the power dynamics in the office.
When Bankman-Fried was on the stand, he pinned much of the day-to-day responsibilities on others and claimed he had no idea about the misappropriation of customer funds until a few months before the exchange and hedge fund collapsed, something Wang, Singh, and Ellison openly refuted.
