November 7, 2023
By Anjali Kochhar
In a stunning turn of events, Sam Bankman-Fried, once hailed as a cryptocurrency industry titan, has been convicted of fraud and money laundering after a month-long trial in New York. The verdict, delivered by the jury after a mere four hours of deliberation, marks a dramatic fall from grace for the 31-year-old former billionaire.
Bankman-Fried, the former head of one of the world’s largest cryptocurrency exchanges, FTX, was apprehended last year following the collapse of his firm. The trial entered around allegations that he misled investors and lenders, ultimately leading to FTX’s demise. Prosecutors charged him with seven counts of fraud and money laundering.
US attorney Damian Williams did not mince words, declaring, “Sam Bankman-Fried perpetrated one of the biggest financial frauds in American history – a multibillion-dollar scheme designed to make him the king of crypto.” He further emphasised the gravity of the case, stating, “This case has always been about lying, cheating, and stealing, and we have no patience for it.”
Throughout the trial, Bankman-Fried maintained his innocence, asserting that while he had made mistakes, he had acted in good faith. His defense argued that the actions were borne out of bad judgment rather than criminal intent.
Bankman-Fried’s legal team, led by Mark Cohen, expressed disappointment with the verdict while also affirming their intent to continue the fight. Cohen stated, “Mr. Bankman-Fried maintains his innocence and will continue to vigorously fight the charges against him.”
The trial saw three of Bankman-Fried’s former close associates, including his ex-girlfriend Caroline Ellison, plead guilty and offer testimony against him in a bid to potentially reduce their own sentences. Their sentencing will occur at a later date.
Key evidence presented by the prosecution revealed that Bankman-Fried’s crypto trading firm, Alameda Research, handled deposits on behalf of FTX customers when traditional banks were hesitant to provide services. Instead of safeguarding these funds, Bankman-Fried redirected them towards repaying Alameda lenders, real estate investments, and political donations. When FTX declared bankruptcy, Alameda owed the exchange a staggering $8 billion.
The fallout from FTX’s collapse left numerous customers unable to recover their funds. However, lawyers involved in the bankruptcy proceedings have since reported successful recovery of the majority of the missing money.
Bankman-Fried’s trial garnered widespread attention for its potential ramifications on the broader cryptocurrency industry. Regulators in the US have criticised the sector for its susceptibility to criminal activities. Despite the lack of imminent regulatory changes, legal battles within the industry are anticipated to persist in US courts, with agencies like the SEC and CFTC playing pivotal roles.
Bankman-Fried, once dubbed “the king of crypto” for his rapid expansion of FTX and strategic manoeuvres during a market downturn, now faces a future marred by potential decades in prison. His sentencing is scheduled for March 28, 2024. This verdict serves as a stark reminder of the challenges and scrutiny facing the cryptocurrency industry as it navigates the complex legal landscape.
About the author
Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.