The jury quickly made their decision after talking for less than five hours.
This marks a big downfall for a 31-year-old who used to be very rich and was called the “King of Crypto.” Now, he might spend many years in jail.
The man, Sam Bankman-Fried, got arrested last year because his company, FTX, went bankrupt.
He will learn his punishment on March 28th next year.
FTX’s Billion-Dollar Collapse
FTX, a company that traded cryptocurrencies, was once worth a lot of money, about $32 billion (£26 billion). But in November last year, when it went bankrupt, $8 billion of customers’ money disappeared.
The United States attorney, Damian Williams, said after the jury’s decision, “Sam Bankman-Fried did one of the biggest money frauds in American history. He planned to become the king of crypto with a scheme worth many billions of dollars. This case has always been about lying, cheating, and stealing, and we won’t tolerate it.”
Bankman-Fried stood in front of the jury with his hands together when they announced the verdict. His parents looked very upset, holding their heads in their hands.
The jury found him guilty of lying to people who invested in his company and to those he borrowed money from. They also found him guilty of taking billions of dollars from FTX, which caused it to fail. He had seven charges against him, which included fraud and money laundering.
Bankman-Fried said he didn’t do anything wrong and pleaded not guilty to all the charges. He admitted he made some mistakes but insisted he acted honestly.
His lawyer, Mark Cohen, said after the verdict, “We respect the decision of the jury, but we are very sad about the outcome. Mr. Bankman-Fried still believes he didn’t do anything wrong, and he will keep fighting the charges against him.”
Co-workers Admit Guilt and Spill Beans in Bankman-Fried’s Case
Three of his former friends and co-workers, including his ex-girlfriend Caroline Ellison, admitted their guilt and agreed to testify against him to try to get shorter sentences. They will find out their punishments later.
The prosecution showed evidence that Bankman-Fried’s crypto trading company, Alameda Research, took deposits on behalf of FTX customers when regular banks wouldn’t let FTX have an account.
Instead of keeping those funds safe, as Bankman-Fried had promised in public, he used the money to pay back loans for Alameda, buy property, invest, and make political donations.
He was found guilty of five charges that could lead to a maximum prison sentence of 20 years each, and two charges that carry a maximum of five years each. So, the total maximum sentence could be as long as 115 years, although it’s unlikely the judge will impose the full duration. Nevertheless, Bankman-Fried is expected to receive a sentence that will keep him in prison for many decades. Furthermore, Crypto exchange Thodex founder Faruk Ozer receives an 11,000 year prison sentence in turkey.
When FTX went bankrupt, Alameda owed the company $8 billion.
“He took the money. He knew it was not right. Nevertheless, he did it because he believed he was more clever and could find a way out of the situation,” said assistant US attorney Nicolas Roos during his closing arguments.
Claiming Mistakes, Not Crimes
Bankman-Fried took the risky step of testifying in his own defense, trying to convince the jurors that the prosecutors couldn’t prove he had criminal intent.
His lawyer, Mr. Cohen, said, “There were poor decisions.” He portrayed Bankman-Fried as a math enthusiast who felt overwhelmed as his companies grew rapidly. “Making mistakes like that doesn’t mean he committed a crime.”
Bankman-Fried argued that the money transfers between his companies were “allowed,” and he claimed that he didn’t fully grasp the financial problems described by his subordinates until just a few weeks before FTX fell apart last year.
This collapse left numerous customers unable to get their money back. However, lawyers handling the bankruptcy case have reported that they have since managed to find and return most of the missing funds.
Bankman-Fried’s trial garnered significant attention due to its potential impact on the entire cryptocurrency industry, which has struggled to bounce back from the market upheaval of the previous year.
From ‘King of Crypto’ to Symbol of Industry Challenges
He was considered a prominent figure representing the challenges within the industry, which US regulators have criticized for its high level of criminal activity.
Before his companies went under, he was well-known for socializing with celebrities and making frequent appearances in Washington and the media to talk about the cryptocurrency sector.
FTX’s rapid expansion and Bankman-Fried’s successful deal-making in the previous year, even when other crypto companies were struggling due to a market downturn, earned him the nickname “the king of crypto.”
With the expectation that Congress won’t be passing new cryptocurrency regulations in the near future, former federal prosecutor Renato Mariotti anticipates that legal battles over the industry will persist in US courts.
“I believe that having specific cryptocurrency regulations in the United States would help reduce the kind of crimes seen in this case,” he stated. “Unfortunately, I don’t see regulations being put in place very soon. This means that the legal battles will continue in the courts, with the SEC (Securities and Exchange Commission) and CFTC (Commodity Futures Trading Commission) handling civil cases,” he added, referring to two US financial regulatory agencies.
Summary
Sam Bankman-Fried, previously a prominent figure in the cryptocurrency world, faces a significant prison sentence after being found guilty of various financial wrongdoing. Some of his associates admitted their guilt and testified against him. The case revealed financial misconduct, and his defense argued that he made mistakes but didn’t commit crimes. This situation illustrates issues in the cryptocurrency industry, and without new regulations, legal battles are expected to continue in the absence of clear rules.
