Sam Bankman-Fried is convicted and might serve decades in prison

Sam Bankman-Fried
Sam Bankman-Fried leaves a Manhattan federal court in New York City on Jan. 3, 2023.
Ed Jones/AFP via Getty Images

The seven criminal charges that Sam Bankman-Fried, the former CEO of cryptocurrency exchange FTX, was found guilty of represent a stunning fall from grace for a once-famous “math nerd” in the banking industry.

Bankman-convicted Fried on accusations of money laundering, wire fraud, and securities fraud, she now faces the possibility of spending decades behind bars. The jury deliberated for a mere few hours prior to rendering a verdict.

It is expected that Bankman-Fried will appeal the ruling.

We honor the jury’s verdict. However, we are rather dissatisfied with the outcome. In a statement, Bankman Fried’s attorney, Mark Cohen, stated, “Mr. Bankman Fried maintains his innocence and will continue to vigorously fight the charges against him.”

Prosecutors attempted to establish throughout a trial that lasted over four weeks that Bankman-Fried was a criminal mastermind who planned a significant financial scam.

Prosecutors described how Bankman-Fried and several of his senior lieutenants covertly transferred billions of dollars worth of customer assets from FTX to Alameda Research, a private trading company he also owned, in a regularly filled courtroom.

According to the U.S. government, the former billionaire used FTX client funds to purchase expensive real estate for friends and family, make dangerous investments, and donate to political causes. He allegedly treated Alameda like his own personal ATM.

While the cryptocurrency industry may be new and players like Sam Bankman-Fried may be new, this kind of corruption is as old as time, stated Damian Williams, U.S. attorney for the Southern District of New York, in a statement. “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.”

“This case has always been about lying, cheating, and stealing, and we have no patience for it,” he stated.

From a penthouse in The Bahamas to prison

The conviction represents a dramatic turnabout in the life of the now 31-year-old M.I.T. alumnus, who just a year ago was living large in a $35 million penthouse alongside some of his colleagues while running a cryptocurrency business valued at tens of billions of dollars during its peak.

As FTX expanded, Bankman-Fried attained celebrity status during a period of significant rise in the use of cryptocurrencies. Both novice traders and well-known Wall Street businesses made a surge of investments, and Bankman-Fried profited from the frenzy.

Easily identifiable by his unkempt hair and his go-to outfit of shorts and a T-shirt, he was praised at conventions and socialized with A-listers such as former quarterback Tom Brady.

However, once a story raised questions about Alameda’s financial stability, his firms began to fail. This led to alarmed FTX clients taking their money out of the bank, essentially resulting in a cryptocurrency run.

FTX and Alameda Research declared bankruptcy on November 11. Bankman-Fried was taken into custody in The Bahamas one month later.

Bankman-Fried’s friends turned against him

Bankman-Fried’s former executives began to turn on him one by one, starting with Caroline Ellison, who had headed Alameda at one point.

His other coworkers, such as Gary Wang, who along with Bankman-Fried co-founded FTX and Alameda Research, entered guilty pleas to different counts and consented to work with federal prosecutors.

At trial, their testimony turned out to be damaging.

They told the court that Bankman-Fried gave them orders to conduct crimes, and their testimony was particularly strong because the collaborating witnesses were not only some of Bankman-Fried’s closest friends but also some of his coworkers.

Wang, for instance, was Bankman-roommate Fried’s roommate at M.I.T. and his friend at math camp.

Sam Bankman-Fried
Bankman-Fried arrives at a Manhattan federal court in New York City on March 30, 2023.
Michael M. Santiago/Getty Images

Fried’s Bankman’s Pray

When Bankman-Fried testified in his own defense—something that most white-collar criminal defendants don’t do—it was arguably the most dramatic moment of the trial.

He prayed that he wouldn’t go to jail because the trial had gone so terribly for him.

Bankman-Fried served as FTX’s public face for many years, actively pursuing journalists, sending out tweets, and giving speeches at conferences.

Even after receiving a house arrest order and being placed under indictment at his parents’ Northern California home, he persisted in pursuing the spotlight.

Judge Lewis Kaplan was so enraged with Bankman-Fried’s repeated conversations with and disclosure of confidential material about the case to the media that he revoked his bail and put him in jail.

Bankman-Fried’s defense crumbles

Using Bankman-Fried’s remarks, Sassoon demonstrated the glaring discrepancy between Bankman-Fried’s public persona and his private behavior.

For instance, even as prosecutors claimed he knew this couldn’t have been further from the truth, Bankman-Fried assured his hundreds of thousands of followers on X, the former Twitter, that FTX was in good shape when the company was on the verge of collapse.

Just a few days before the company collapsed, on November 7, he tweeted, “FTX is fine”. “Assets are fine.”

Bankman-Fried argued that he was a “math nerd” who had gotten himself into trouble rather than a “movie villain,” but the prosecution’s narrative ran counter to this.

Additionally, the defense attempted to portray Bankman-Fried as an inexperienced leader who was unable to oversee executives at FTX and Alameda Research or to keep track of what was going on at two multibillion-dollar corporations.

Bankman-Fried’s attorney, Mark Cohen, acknowledged in his closing statement that his client made errors but maintained that he always operated with good intentions and never planned to conduct any crimes.

Cohen stated People make mistakes in the real world.” They are hesitant. They do not account for unforeseen events. They make both wise and foolish business judgments, as well as errors that they later wish they had avoided.

The jury decided to support the prosecution after several hours of deliberation.

Thus, Bankman-Fried could potentially spend the remainder of his life behind bars while he is detained in a federal jail located in Brooklyn.

On March 28, Judge Kaplan will impose Bankman-sentence Fried’s.

Credits: NPR

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