FTX trial: 'Crypto king' Bankman-Fried faces 115 years in prison
FTX cryptocurrency exchange founder Sam Bankman-Fried has been convicted on seven charges of fraud and conspiracy, following 15 days of testimony and roughly 4.5 hours of jury deliberation. 31-year-old Bankman-Fried faces decades in prison, theoretically up to 115 years. US Attorney Damian Williams commended the verdict, asserting that the government has "no patience" for fraudulent and corrupt activities. Bankman-Fried's lawyer, Mark Cohen, expressed disappointment and continued to assert his client's innocence. The sentencing hearing is scheduled for March 28, 2024.
Charges against Bankman-Fried
Bankman-Fried was found guilty of pilfering billions of dollars from FTX clients' accounts and deceiving lenders connected to FTX's sibling company, Alameda Research. He was also charged with defrauding FTX investors and money laundering. During the trial, Bankman-Fried confessed to discovering in 2020 that FTX customer funds were held by Alameda but failed to take measures to protect them. Upon learning in the fall of 2022 that Alameda owed $8 billion to FTX, no one was terminated by Bankman-Fried.
How the FTX collapse happened
FTX went bankrupt on November 11, 2022, after a report by CoinDesk showed that Alameda held a large amount of FTX's exchange token, FTT. This report, combined with tweets from Binance CEO Changpeng Zhao, caused a wave of withdrawals from FTX, which ultimately led to the bankruptcy of FTX, Alameda, and their subsidiaries Bankman-Fried was arrested in December of the same year.
Testimonies against Bankman-Fried
Throughout the trial, several former allies testified against Bankman-Fried, including MIT friends who became his co-founders, and his former girlfriend and business consultant, Caroline Ellison. Ellison's testimony offered a detailed account of events in which nearly every decision at both Alameda and FTX was made by Bankman-Fried. Co-founder Gary Wang and CTO Nishad Singh also testified against him after pleading guilty to financial crimes as part of a plea agreement with the government.
Impact on crypto industry
This verdict concludes a yearlong journey that saw Bankman-Fried transform from a billionaire enjoying a lavish lifestyle to a defendant in a high-profile white-collar crime case. FTX downfall sparked fear in the trillion-dollar crypto industry, with approximately one million customers at risk of losses. Before its collapse, FTX drew millions of users and high-profile supporters like Tom Brady and Gisele Bundchen. The trial has been closely monitored for indications of a broader crackdown on the largely unregulated cryptocurrency market.
What's next for Bankman-Fried
Judge Lewis Kaplan has scheduled Bankman-Fried's sentencing hearing for March 28, 2024. He is expected to remain in federal jail in Brooklyn till then. A second trial on five more charges, which were separate from this case, is scheduled for March. However, Judge Kaplan has asked prosecutors to decide by February 1 whether that trial will go ahead. Bankman-Fried's legal battles are far from over as he continues to defend himself against the charges.
