The latest chapter of the FTX saga led to an unhappy ending for its main character, as a Manhattan jury declared its founder, Sam Bankman-Fried, guilty of financial fraud on Thursday, November 2nd.
The twelve-member federal jury convicted the former cryptocurrency titan on all seven counts of financial fraud, convinced by prosecutors’ arguments that greed was what drove the 31-year-old Bankman-Fried to defraud his exchange’s customers of a shocking $8 billion.
It took just four hours for the jury to deliberate on the case, but the conviction is seen as a triumph for the US Justice Department as it marks a historic moment in dealing with the legal consequences of cryptocurrency trading. It was also a personal victory for Manhattan’s top federal prosecutor Damian Williams who has built his reputation on weeding out corruption in the financial sector.
While the jury has found Bankman-Fried guilty, his sentence still needs to be determined by presiding US District Judge Lewis Kaplan who is slated to make his announcement at a later date.
However, Bankman-Fried’s defense attorneys raised objections to a number of Kaplan’s rulings prior to, and even during, the trial; they are set to file a motion appealing the jury’s verdict.
The jurors based their decision on arguments posed by prosecutors regarding the way Bankman-Fried transferred funds from the exchange into Alameda Research, his crypto-centric hedge fund. The beleaguered ex-crypto titan claimed that he and FTX prioritized the safety of customers’ money in a slew of ads featured on television and social media.
In truth, however, the money transferred to the hedge fund was used to pay off lenders and loaned to Bankman-Fried and several of his colleagues. The loans were then used in a series of venture investments, and over $100 million was donated to several campaigns in the United States that lobbied for cryptocurrency legislation – something that Bankman-Fried assumed would pay off for his initiatives.
However, when push came to shove, Bankman-Fried found himself dropped into the pit by three of his most trusted confidantes – ex-FTX executives Nishad Singh and Gary Wang, as well as ex-Alameda CEO Caroline Ellison – who all testified that they committed various institutional crimes at his behest.