Sam Bankman-Fried, a prominent figure in the cryptocurrency world and the once-revered “Crypto King,” has been convicted of money laundering and fraud after a five-hour jury deliberation in Manhattan, New York. Bankman-Fried’s legal woes began last year when his crypto exchange firm, FTX, declared bankruptcy. FTX, previously valued at a staggering $32 billion, crumbled in November, leaving $8 billion in customer funds unaccounted for.
The jury found Bankman-Fried guilty on multiple charges, including deceiving investors and lenders and misappropriating billions from FTX, a sequence of events that played a role in the exchange’s collapse. He faced seven counts of money laundering and fraud.
Mark Cohen, Bankman-Fried’s lawyer, expressed dissatisfaction with the verdict, maintaining that his client would persist in his defense against the allegations.
Three of Bankman-Fried’s former associates — including his ex-girlfriend — testified against him and for the prosecution in an attempt to lessen their legal ramifications. The prosecution had solid evidence that showed that Bankman-Fried’s crypto hedge fund, Alameda Research, accepted customer deposits from FTX in its early days when conventional banks were unwilling to collaborate with the exchange. Rather than keeping the funds safe as agreed, Bankman-Fried diverted them to acquire property, repay Alameda debts, make political donations and invest.
Bankman-Fried’s conviction carries the potential for a substantial prison sentence. Five of the charges he faces come with a maximum term of 20 years each, while the other two have a five-year limit. Although it is improbable that he will serve the full 110-year sentence, he is expected to be incarcerated for an extended period.
Assistant U.S. Attorney Nicolas Roos, in his closing arguments, emphasized Bankman-Fried’s culpability, stating, “He knowingly misappropriated the funds, fully aware of its wrongfulness, believing that his intelligence would allow him to escape the consequences.”
In an attempt to persuade the jury that he had not behaved with criminal intent, Bankman-Fried took the bold decision to testify in his defense. He argued that the money transfers between his companies were acceptable and that he was largely unaware of the financial crisis described by his subordinates until just before FTX’s collapse.
His sentencing is scheduled for March 28, 2024, with the possibility of facing another trial on additional charges, including campaign finance violations. Judge Lewis Kaplan has asked the prosecution to make a decision by February regarding the potential second trial as it could influence his sentencing date.
The trial of Bankman-Fried following the spectacular collapse of FTX is likely to remain fresh on the minds of top execs at crypto firms such as Bit Digital Inc. (NASDAQ: BTBT) given that the bankruptcy of FTX nearly brought the entire crypto industry to its knees.
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