FTX founder Sam Bankman-Fried was found guilty of stealing from the customers of his now-failed cryptocurrency exchange in one of the biggest financial frauds in history on Thursday.
A 12-member jury has convicted Bankman-Fried on all seven counts after a monthlong trial in Manhattan Legal court. They found Bankman-Fried guilty of looting $8 billion from the exchange’s customers.
The jury found Bankman-Fried guilty after just over four hours of deliberations. The Massachusetts Institute of Technology Graduate who had pleaded not guilty to two counts of fraud and five counts of conspiracy could face up to decades in prison. U.S. District Judge Lewis Kaplan has set Bankman-Fried’s sentencing for March 28, 2024, on a second set of charges brought by prosecutors earlier this year, including alleged foreign bribery and bank fraud conspiracies.
The conviction is a massive victory for the U.S. Justice Department and Damian Willams, who is one of the top federal prosecutors in Manhattan. He has made rooting out corruption in financial markets one of his top priorities.
“The crypto industry might be new, the players like Sam Bankman-Fried may be new, but this kind of fraud is as old as time, and we have no patience for it,” told Williams to reporters outside the courthouse.
Despite going on social media and proclaiming that the exchange prioritized the safety of customer funds, Bankman-Fried siphoned money from FTX to his crypto-focused hedge fund, Alameda Research. Alameda Research then used this money to pay its lenders and to make loans to Bankman-Fried and other top executives, who in turn used the money to make speculative venture investments. They also donated upwards of $100 million to U.S. political campaigns to support legislation that promotes cryptocurrency.
In the ever-evolving landscape of cryptocurrency and digital assets, few names have made as much of an impact as FTX and Sam Bankman-Fried. FTX, launched in 2019, rapidly ascended to become one of the most prominent players in the industry, and Bankman-Fried’s journey as its leader is a tale of meteoric success and, more recently, a controversial decline.
Rise and Fall
FTX quickly distinguished itself through its robust trading platform, a wide range of supported cryptocurrencies, and groundbreaking products such as leveraged tokens and prediction markets. Sam Bankman-Fried, the driving force behind FTX, shaped the exchange’s success. Known for his transparency and active presence on social media, Bankman-Fried became a prominent figure in the crypto space. His relentless work ethic and focus on user satisfaction contributed to FTX’s rapid growth.
While the rise of FTX was nothing short of spectacular, it was accompanied by a series of events that led to a significant decline. The first notable blow was the controversy surrounding leverage tokens. Furthermore, the exchange’s meteoric success drew the scrutiny of financial authorities, and regulatory challenges became a significant issue. The U.S. Commodity Futures Trading Commission (CFTC) initiated an investigation into whether FTX had violated regulations by allowing U.S. citizens to access their platform without proper registration. FTX’s decision to block U.S. users from accessing specific tokens was considered a concession to regulatory pressure.
The journey of FTX and Sam Bankman-Fried reflects the cryptocurrency industry itself—marked by rapid developments, regulatory challenges, and evolving public perception.