FTX founder Sam Bankman-Fried\u2019s spectacular rise and fall in the cryptocurrency industry \u2013 a journey that included his testimony before Congress, a Super Bowl advertisement and dreams of a future run for president \u2013 hit a new bottom Thursday when a New York jury convicted him of fraud in a scheme that cheated customers and investors of at least $10 billion. After the monthlong trial, jurors rejected Bankman-Fried\u2019s claim during four days on the witness stand in Manhattan federal court that he never committed fraud or meant to cheat customers before FTX, once the world\u2019s second-largest crypto exchange, collapsed into bankruptcy a year ago.<\/p>\n
\u201cHis crimes caught up to him. His crimes have been exposed,\u201d Assistant US Attorney Danielle Sassoon told the jury of the onetime billionaire just before they were read the law by Judge Lewis A Kaplan and began deliberations. Sassoon said Bankman-Fried turned his customers\u2019 accounts into his \u201cpersonal piggy bank\u201d as up to $14 billion disappeared. She urged jurors to reject Bankman-Fried\u2019s insistence when he testified over three days that he never committed fraud or plotted to steal from customers, investors and lenders and didn\u2019t realise his companies were at least $10 billion in debt until October 2022.<\/p>\n
The trial attracted intense interest with its focus on fraud on a scale not seen since the 2009 prosecution of Bernard Madoff, whose Ponzi scheme over decades cheated thousands of investors out of about $20 billion. Madoff pleaded guilty, was sentenced to 150 years in prison, where he died in 2021. The prosecution of Bankman-Fried, 31, put a spotlight on the emerging industry of cryptocurrency and a group of young executives in their 20s who lived together in a $30 million luxury apartment in the Bahamas as they dreamed of becoming the most powerful player in a new financial field.<\/p>\n
US Attorney Damian Williams said they engaged in one of the biggest frauds in US history. Prosecutors made sure jurors knew that the defendant they saw in court with short hair and a suit was not the man with big messy hair and shorts that became his trademark appearance after he started his cryptocurrency hedge fund, Alameda Research, in 2017 and FTX, his cryptocurrency exchange, two years later.<\/p>\n
They showed the jury pictures of Bankman-Fried sleeping on a private jet, sitting with a deck of cards and mingling at the Super Bowl with celebrities including the singer Katy Perry. Assistant US Attorney Nicolas Roos called Bankman-Fried someone who liked \u201ccelebrity chasing.\u201d In a closing argument, defence lawyer Mark Cohen said prosecutors were trying to turn \u201cSam into some sort of villain, some sort of monster.\u201d \u201cIt\u2019s both wrong and unfair, and I hope and believe that you have seen that it\u2019s simply not true,\u201d he said. \u201cAccording to the government, everything Sam ever touched and said was fraudulent.\u201d The government relied heavily on the testimony of three former members of Bankman-Fried\u2019s inner circle, his top executives including his former girlfriend, Caroline Ellison, to explain how Bankman-Fried used Alameda Research to siphon billions of dollars from customer accounts at FTX.<\/p>\n
With that money, prosecutors said, the Massachusetts Institute of Technology graduate gained influence and power through investments, contributions, tens of millions of dollars in political contributions, Congressional testimony and a publicity campaign that enlisted celebrities like comedian Larry David and football quarterback Tom Brady. Ellison, 28, testified that Bankman-Fried directed her while she was chief executive of Alameda Research to commit fraud as he pursued ambitions to lead huge companies, spend money influentially and run for US president someday. She said he thought he had a 5 per cent chance to be US president someday.<\/p>\n
Becoming tearful as she described the collapse of the cryptocurrency empire last November, Ellison said the revelations that caused customers collectively to demand their money back, exposing the fraud, brought a \u201crelief that I didn\u2019t have to lie anymore.\u201d FTX cofounder Gary Wang, who was FTX\u2019s chief technology officer, revealed in his testimony that Bankman-Fried directed him to insert code into FTX\u2019s operations so that Alameda Research could make unlimited withdrawals from FTX and have a credit line up to $65 billion. Wang said the money came from customers. Nishad Singh, the former head of engineering at FTX, testified that he felt \u201cblindsided and horrified\u201d at the result of the actions of a man he once admired when he saw the extent of the fraud as the collapse last November left him suicidal.<\/p>\n
Ellison, Wang and Singh all pleaded guilty to fraud charges and testified against Bankman-Fried in the hopes of leniency at sentencing. Bankman-Fried was arrested in the Bahamas last December and extradited to the United States, where he was freed on a $250 million personal recognizance bond with electronic monitoring and a requirement that he remain at the home of his parents in Palo Alto, California. His communications, including hundreds of phone calls with journalists and internet influencers, along with emails and texts, eventually got him in trouble when the judge concluded he was trying to influence prospective trial witnesses and ordered him jailed in August.<\/p>\n
During the trial, prosecutors used Bankman-Fried\u2019s public statements, online announcements and his Congressional testimony against him, showing how the entrepreneur repeatedly promised customers that their deposits were safe and secure as late as last Nov. 7 when he tweeted \u201cFTX is fine. Assets are fine\u201d as customers furiously tried to withdraw their money. He deleted the tweet the next day. FTX filed for bankruptcy four days later.<\/p>\n","protected":false},"excerpt":{"rendered":"
FTX founder Sam Bankman-Fried\u2019s spectacular rise and fall in the cryptocurrency industry \u2013 a journey that included his testimony before\u2026<\/p>\n","protected":false},"author":28,"featured_media":9731,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[74],"tags":[2729,2731,2727,2726,2728,2730,2725],"class_list":["post-9730","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-money","tag-billions-of-dollars","tag-congressional-testimony","tag-cryptocurrency-fraud","tag-ftx","tag-investors","tag-manhattan-court","tag-sam-bankman-fried"],"reading_time":"5 min read","_links":{"self":[{"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/posts\/9730","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/users\/28"}],"replies":[{"embeddable":true,"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/comments?post=9730"}],"version-history":[{"count":0,"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/posts\/9730\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/media\/9731"}],"wp:attachment":[{"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/media?parent=9730"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/categories?post=9730"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.businessupturn.com\/usa\/wp-json\/wp\/v2\/tags?post=9730"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}