John Deaton, founder of CryptoLaw, joins Making Money to discuss the case against former FTX CEO Sam Bankman-Fried.
FTX founder Sam Bankman-Fried was found guilty on all allegations related to the collapse of his now-bankrupt cryptocurrency exchange in the first of two criminal cases against the former CEO.
A New York jury in Manhattan federal court agreed with prosecutors that Bankman-Fried defrauded investors, customers and lenders in connection with the collapse of his crypto empire.
Former FTX CEO Sam Bankman-Fried leaves federal court after a bail hearing ahead of his October trial on July 26, 2023 in New York City. (ANGELA WEISS/AFP via Getty Images / Getty Images)
Prosecutors accused Bankman-Fried, who founded and controlled both FTX and its sister hedge fund Alameda Research, of embezzling and embezzling billions of dollars in FTX customer deposits, misleading investors and directing other executives at his companies to do the same.
At trial, he faced seven counts: two counts of wire fraud and five counts of conspiracy. The charges combined carry a maximum sentence of 110 years behind bars. Judge Lewis Kaplan, who presided over the trial, scheduled the sentencing hearing for the morning of March 28.
Bankman-Fried’s attorney, Mark Cohen, said in a statement after the conviction was announced that the defense was “very disappointed with the outcome” and signaled that it would likely appeal the verdict, adding that “Mr. Bankman -Fried maintains his innocence and will continue to vigorously fight the allegations against him.”
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“Sam Bankman-Fried committed one of the largest financial fraud cases in American history,” U.S. Attorney for the Southern District of New York Damian Williams said after the sentencing. “The cryptocurrency industry could be new. The actors like Sam Bankman Fried could be new. But this kind of corruption is as old as time.”
Several members of Bankman-Fried’s inner circle testified against him during the trial. The prosecution’s key witnesses were Caroline Ellison – Bankman-Fried’s ex-girlfriend and former CEO of Alameda Research – as well as FTX co-founder Gary Wang and former FTX chief technology officer Nishad Singh. The trio had all previously pleaded guilty and agreed to cooperate with the government.
FTX founder Sam Bankman-Fried testifies on the witness stand in federal court in New York on Monday, October 30, 2023. (Jane Rosenberg)
Bankman-Fried also represented his own defense, admitting to making mistakes but emphasizing that he did not defraud or steal from anyone.
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The FTX founder took advantage of the rise of Bitcoin and other digital assets to amass an estimated net worth of $26 billion and became an influential political and philanthropic donor before FTX filed for bankruptcy in November 2022.
The crypto exchange collapsed after reports that FTX had merged assets with Alameda, leading to waves of customers withdrawing funds. Bankman-Fried was indicted the next month.
FTX was once the second largest cryptocurrency exchange in the world. (Photographer: Andrey Rudakov/Bloomberg via Getty Images / Getty Images)
In addition to the fraud and conspiracy charges, Bankman-Fried is accused of violating campaign finance laws by using FTX customer funds to make billions in political contributions through an illegal straw donor program and of allegedly bribing Chinese officials.
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The second criminal trial against Bankman-Fried is scheduled to begin in March 2024. He has pleaded not guilty to all charges against him.
FOX Business’ Kelly O’Grady, Justin Freiman, Daniel Hillsdon and Eric Revell contributed to this report.