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Sam Bankman-Fried, the former head of cryptocurrency exchange FTX, was found guilty of each of the seven criminal charges he faced, marking a spectacular fall from grace for a “maths nerd” who was once a shining star of finance.
Bankman-Fried now faces decades in prison after being convicted of securities fraud, wire fraud and money laundering. The jury deliberated only a few hours before returning its verdict.
Bankman-Fried will likely appeal the decision.
“We respect the jury’s decision. But we are very disappointed in the outcome. Mr. Bankman Fried maintains his innocence and will continue to vigorously fight the charges against him,” Mark Cohen, Bankman-Fried’s attorney, said in a statement. a statement.
During a trial that lasted more than four weeks, prosecutors sought to prove that Bankman-Fried was a criminal mastermind who orchestrated one of the largest financial frauds in history.
In an often crowded courtroom, prosecutors detailed how Bankman-Fried and some of his top lieutenants secretly funneled billions of dollars in client assets from FTX to Alameda Research, a private trading company he also controlled .
The U.S. government said the former billionaire treated Alameda like a personal piggy bank, using FTX customers’ money to buy luxury real estate for friends and family, and to make political donations and risky investments.
“This is a pyramid of deception built by the defendant on a foundation of lies and false promises, all to obtain money,” Assistant U.S. Attorney Nicholas Roos said in a statement. court in its final argument. “And finally, it collapsed, leaving countless victims in its wake.”
From a penthouse in the Bahamas to prison
The conviction marks a sudden reversal of fortune for an MIT graduate, now 31, who last year lived in a $35 million penthouse with some of his colleagues while running a crypto empire estimated at several dozen dollars. billions of dollars at its peak.
As FTX grew, Bankman-Fried became a celebrity in his own right at a time when the popularity of cryptocurrencies was growing. There was a wave of investment from amateur traders and established Wall Street firms, and Bankman-Fried capitalized on this craze.
Instantly recognizable by his tousled hair and typical outfit of a t-shirt and shorts, he was feted at conventions and hung out with celebrities like former quarterback Tom Brady.
But his businesses began to collapse after an article raised concerns about Alameda’s financial health. This prompted frightened FTX customers to withdraw their funds, in what was effectively a crypto trade on the bank.
On November 11, FTX and Alameda Research filed for bankruptcy. A month later, Bankman-Fried was arrested in the Bahamas.
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Bankman-Fried’s friends turned on him
Then, one by one, Bankman-Fried’s former executives began to turn on him, including Caroline Ellison, who ran Alameda at one point and was also his on-and-off girlfriend.
She and other colleagues, including Gary Wang — who co-founded Alameda Research and FTX with Bankman-Fried — pleaded guilty to separate charges and agreed to cooperate with federal prosecutors.
Their testimony proved damning during the trial.
They told the court that Bankman-Fried ordered them to commit crimes, and their comments were particularly compelling because the cooperating witnesses were not only Bankman-Fried’s colleagues, they were also among his closest friends.
Wang, for example, was Bankman-Fried’s friend at math camp and his roommate at MIT.
Hail Mary by Bankman-Fried
Perhaps the most dramatic moment of the trial came when Bankman-Fried testified in his own defense — something most white-collar criminal defendants do not do.
The trial had gone so badly for him that he decided to shout a Hail Mary, hoping it would save him from prison.
It was a high-stakes gamble for someone with a reputation for taking risks. But that did not work.
Bankman-Fried withered under scathing cross-examination from Danielle Sassoon, a formidable prosecutor who worked for the late Supreme Court Justice Antonin Scalia.
She used Bankman-Fried’s own words against him to great effect, and she was spoiled for choice.
For years, Bankman-Fried was the public face of FTX, enthusiastically courting journalists, posting tweets and speaking at conferences.
And he continued to seek attention even after he was charged and placed under house arrest at his parents’ home in Northern California.
Bankman-Fried continued to speak and share sensitive information about the case with reporters, leaving Judge Lewis Kaplan so tired that he revoked Bankman-Fried’s bond and sent him to prison.
Bankman-Fried’s defense collapses
Sassoon used Bankman-Fried’s comments to show that there was a marked difference between what Bankman-Fried said in public and how he acted behind the scenes.
For example, when FTX was on the brink of collapse, Bankman-Fried told his hundreds of thousands of followers on X, formerly known as Twitter, that he was in good shape, even though prosecutors claimed that he knew that couldn’t have been further from the truth.
“FTX is doing great,” he tweeted on November 7, just days before the company imploded. “The assets are fine.”
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The picture painted by the prosecution was at odds with Bankman-Fried’s defense that he was not a “movie villain” but a “math nerd” who got in over his head .
The defense also tried to argue that Bankman-Fried was an inexperienced executive unable to keep tabs on what was happening at two multibillion-dollar companies or properly supervise executives at FTX and Alameda Research.
In his closing argument, Bankman-Fried’s attorney, Mark Cohen, said Bankman-Fried made mistakes, but maintained he always acted in good faith and never had the intention to commit crimes.
“In the real world, people misjudge things,” Cohen said. “They hesitate. They don’t plan for the unexpected. They make good and bad business decisions and make mistakes they wish they could correct later.”
After several hours After deliberation, the jury sided with the prosecution.
That means that for now, Bankman-Fried remains incarcerated in a federal prison in Brooklyn, facing the prospect of spending the rest of his life in prison.
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