Sam Bankman-Fried is guilty on all seven federal charges in his criminal trial for defrauding customers of his crypto exchange out of billions of dollars with his crypto empire, jurors decided on Thursday night in a Southern District of New York court, according to CoinDesk. Jurors reached a verdict at 7:40 PM that the founder of the cryptocurrency exchange FTX and Alameda Research was guilty, and Bankman-Fried could face decades in prison.
Bankman-Fried pleaded not guilty to federal charges of fraud, conspiracy, and money laundering in a Department of Justice case, facing a maximum of 115 years in prison. The prosecution led by US Attorney Danielle Sassoon alleged SBF coordinated a “pyramid of deceit” against FTX customers, extracting over $US10 billion in value without their consent. FTX was one of the largest cryptocurrency exchanges in the world, and its downfall sent shockwaves throughout cryptocurrency and the financial world. SBF’s fraud caused a network of bankruptcies, regulations, and financial toil that cryptocurrency has still not recovered from.
The trial of Bankman-Fried shed light on the chaos and deception that took place in the final months before FTX’s collapse, as well as the personal chaos of its founder. The public learned that SBF’s other company, Alameda Research, received special privileges ingrained in FTX’s code. Alameda was allowed a $US65 billion line of credit, coming straight out of FTX customer accounts, which it used to make risky investments and political donations.
None of this was communicated to customers of FTX, who believed their money was reflected by the number listed on their account, but this was not the case from as early as March 2021. Customer funds peaked at FTX in June 2022 at over $US11 billion, but its bank accounts only held $US2.3 billion. Those details came to light under forensic accountant Dave Easton’s testimony for the prosecution.
Former Alameda Research CEO Caroline Ellison testified for the prosecution, saying SBF directed her to commit certain crimes. Ellison revealed that at one point, FTX considered raising funding from Mohammed Bin Salman, a Saudi Prince notorious for once detaining his own mother. SBF also asked Ellison to create alternate presentations of Alameda’s finances when the company was in massive debt. The testimony from the former CEO, and SBF’s ex-girlfriend, showed SBF’s awareness of his company’s dire finances.
The man himself testified for three days, as jurors listened to Bankman-Fried tell his side of the story, albeit a confusing one. The FTX founder’s story even seemed to bewilder himself saying he does not recall certain details over 100 times. The founder of FTX and Alameda painted himself as a well-intentioned but busy CEO, which made him largely ignorant of the inner workings of his companies. To see him as innocent, “you’d have to believe the defendant, who graduated from MIT and built two multibillion-dollar companies, was actually clueless,” said the prosecution in closing arguments.
Testimony from director of engineering Nishad Singh and chief technology officer Gary Wang contradicted SBF’s claims of ignorance. Singh and Wang built the code that gave Alameda special privileges to abuse customer funds and did so at the direction of their founder. When Singh asked SBF how much FTX was short, SBF said this was the “wrong question,” and the better question to ask was “How can we deliver?” The true figure was roughly $US8 billion.
The maximum sentence for SBF’s crimes was estimated to be around 115 years in prison, but legal experts estimate a sentence of 10-20 years, according to CoinDesk. Judge Lewis Kaplan has significant discretion over the duration of his jail time and is likely to announce an official sentence for Bankman-Fried in the coming months.