- “Sam Bankman-Fried perpetrated one of the biggest frauds in American history, a multibillion-dollar scheme designed to make him the king of crypto.”
Beleaguered cryptocurrency king and FTX founder Sam Bankman-Fried was convicted on seven counts in his fraud trial in New York Thursday, ending a storied ascent that brought in millions in political donations and sparked criminal probes across agencies when FTX collapsed.
Bankman-Fried was convicted in the Southern District of New York of charges including wire fraud and conspiracy to commit securities fraud and money laundering following more than two weeks of testimony in one of the highest-profile financial crime cases in years.
The 31-year-old former cryptocurrency billionaire was convicted of two counts of wire fraud conspiracy, two counts of wire fraud and one count of conspiracy to commit money laundering, charges that each carry a maximum sentence of 20 years in prison. He was also convicted of conspiracy to commit commodities fraud and conspiracy to commit securities fraud, which each carry a five-year maximum sentence.
“Sam Bankman-Fried perpetrated one of the biggest frauds in American history, a multibillion-dollar scheme designed to make him the king of crypto,” Damian Williams, U.S. attorney for the Southern District of New York, said in a news briefing following the verdict. “Here’s the thing: the cryptocurrency industry might be new. The players like Sam Bankman-Fried might be new. This kind of fraud, this kind of corruption, is as old as time, and we have no patience for it.”
The MIT graduate steadfastly maintained his innocence since his arrest late last year after the startling implosion of FTX, the crypto exchange he co-founded, amid an $8 billion shortfall in funds and allegations he had used customer money to prop up his struggling hedge fund, Alameda Research.
Bankman-Fried was accused of using some of that money to buy real estate, make political contributions and finance pet charitable projects, among other purposes unconnected to FTX’s business of letting people buy and trade digital currencies.
More broadly, FTX’s bankruptcy in November of 2022 cast a cloud over the entire crypto industry, as the sudden collapse of other major industry players vaporized billions in client wealth.
As the verdict was read, Bankman-Fried stood frozen, facing the jury. His parents, seated in the courtroom, held each other, watching closely.
It was a stunning and supersonic fall from grace for a man who, according to his lawyers, still believed his billion-dollar empire was solvent twelve months ago.
“So many people believed in him, he was a genius,” Natalie Tien, a former FTX employee, told CBS News.
Tien said attending the trial of her former boss was cathartic after experiencing months of confusion and depression when his empire collapsed and she too “lost a lot of money.”
“Sam Bankman-Fried thought that he was above the law,” U.S. Attorney Merrick Garland said in a statement. “Today’s verdict proves he was wrong. This case should send a clear message to anyone who tries to hide their crimes behind a shiny new thing they claim no one else is smart enough to understand: the Justice Department will hold you accountable.”
Bankman-Fried’s attorney and federal prosecutors made closing arguments to a New York City juror on Wednesday after more than four weeks of testimony.
Witnesses for the prosecution included Caroline Ellison, Nishad Singh and Gary Wang, all of whom once worked for Bankman-Fried at FTX or Alameda and all of whom pleaded guilty to multiple charges including participating in an alleged scheme to defraud millions of customers.
The three accused him of orchestrating the use of FTX customer money to make purchases ranging from a luxury condo in the Bahamas to covering losses at Alameda, Bankman-Fried’s cryptocurrency hedge fund.
Ellison testified that Bankman-Fried directed her to siphon money from FTX customer accounts to fund investments and trading strategies at Alameda, where she was CEO until it and FTX collapsed. FTX co-founder Wang detailed how he and the defendant engaged in financial crimes and lied about it, while Singh, FTX’s former director of engineering, detailed how Bankman-Fried spent FTX money.
Defense attorneys sought to portray Bankman-Fried as a math nerd who made poor management decisions at FTX, but who had nothing criminal in mind while building his crypto empire.
In the end, it was perhaps the hubristic display during Bankman-Fried’s own testimony that bore the most weight, and did the most damage. Under the prosecution’s cross-examination, Bankman-Fried said “over 140 times” that he couldn’t remember a document, conversation or other key details. The government said, again and again, that was because “he was lying.”
Bankman-Fried testified that he believed Alameda’s spending came from corporate, not customer, funds, and that any mistakes he made were not ill-intentioned. FTX was intended to “move the ecosystem forward,” he testified during the proceedings. “It turned out the opposite of that.”
It is now up to the judge, Lewis Kaplan, to determine what Bankman-Fried’s sentence will be. While the charges carry a statutory minimum of 110 years, and sentencing guidelines provide a type of formula, the judge has wide-ranging discretion to rule below that guidance. However, CBS News legal analyst Rikki Klieman says if Judge Kaplan “believes the defendant was committing perjury in his courtroom, he might even go above the guidelines.”
For her part, Tien, the former FTX employee, said that jail time might too harsh, wondering if Bankman-Fried could perhaps instead help the government investigate other potential crypto-trading fraud.
The next trial in the saga of the United States vs. Sam Bankman-Fried is scheduled for March, 11, 2024, when other charges that the government did not bring forward will be folded into yet another court proceeding.
This trial concludes almost one year to the day FTX stopped allowing customers to withdraw deposits, which marked the beginning of the end of the so-called crypto king’s meteoric rise.