In this courtroom sketch, FTX founder Sam Bankman-Fried, right, testifies as Judge Lewis Kaplan, top left, presides over Bankman-Fried's trial in Manhattan federal court on Tuesday . Elizabeth Williams via AP
NEW YORK โ FTX founder Sam Bankman-Fried's spectacular rise and fall in the cryptocurrency industry (a journey that included congressional testimony, a Super Bowl ad, and dreams of a future presidential run) hit rock bottom Thursday when a New York jury convicted him of fraud for stealing at least $10 billion from clients and investors.
After the month-long trial, jurors rejected Bankman-Fried's claim during her testimony in Manhattan federal court that she never committed fraud or intended to deceive customers before FTX, once the The second largest cryptocurrency exchange in the world collapsed and declared bankruptcy a year ago.
"Mr. Bankman-Fried. Please stand and face the jury," Judge Lewis A. Kaplan ordered just before a jury forewoman answered "guilty" seven times to two counts of wire fraud, two counts of conspiracy to wire fraud and three other conspiracy charges, which carry possible penalties up to 110 years in prison. Bankman-Fried is likely to face much less than the maximum at a sentencing set for March 28.
When the verdict was read, Bankman-Fried appeared stunned, his face impassive and his hands clasped in front of him, while his lawyers sat beside him. When he sat down, he looked down for several minutes.
Their attorney, Mark Cohen, later read a statement outside court to say they โrespect the jury's decision. But we are very disappointed with the result.โ
"Mr. Bankman Fried maintains his innocence and will continue to vigorously fight the charges against him," Cohen said.
Federal prosecutor Damian Williams, who sat in the front row of the spectator section during the verdict, stood before cameras outside the courtroom and said Bankman-Fried โperpetrated one of the largest financial frauds in American history.โ , a multimillion-dollar plan designed to make him the king of cryptocurrencies.โ
โBut here's the thing: the cryptocurrency industry might be new. Players like Sam Bankman-Fried could be new. โThis type of fraud, this type of corruption is as old as time and we have no patience for it,โ he stated.
He said the case should serve as a warning to all other scammers who "think they are untouchable, that their crimes are too complex," that they are too powerful to prosecute or that they can talk their way out of their crimes because "I promise I'll have enough wives for all of them.โ
The jury rejected Bankman-Fried's insistence during three days of testimony that he never committed fraud or conspired to steal from clients, investors and lenders and that he did not realize his companies were at least $10 billion in debt until October 2022.
After the jury left the courtroom, Bankman-Fried's parents, both Stanford University law professors, moved to the front row behind him. His father put his arm around his wife. As Bankman-Fried was led out of the courtroom, he looked back and nodded at his mother, who returned the gesture and then became emotional and ran her hand over her face after he left. room.
The trial attracted widespread interest as it focused on fraud on a scale not seen since the 2009 indictment of Bernard Madoff, whose decades-long Ponzi scheme bilked thousands of investors out of about $20 billion. Madoff pleaded guilty and was sentenced to 150 years in prison, where he died in 2021.
The prosecution of Bankman-Fried, 31, highlighted the emerging cryptocurrency industry and a group of young executives in their 20s who lived together in a $30 million luxury apartment in the Bahamas while dreaming of becoming into the most powerful player in a new financial field.
Prosecutors made sure jurors knew that the defendant they saw in court with short hair and a suit was not the man with long, messy hair and shorts who became his signature look after he founded his fund. cryptocurrency coverage firm Alameda Research in 2017 and FTX, its cryptocurrency exchange, two years later.
They showed jurors photographs of Bankman-Fried sleeping on a private jet, sitting with a deck of cards and socializing at the Super Bowl with celebrities such as singer Katy Perry. Assistant U.S. Attorney Nicolas Roos called Bankman-Fried someone who liked to โchase celebrities.โ
In a closing argument, Cohen said prosecutors were trying to turn "Sam into some kind of villain, some kind of monster."
"It's both wrong and unfair, and I hope and I think you've seen that it's just not true," he said. "According to the government, everything Sam touched and said was fraudulent."
The government relied heavily on testimony from three former members of Bankman-Fried's inner circle, his top executives, including his ex-girlfriend, Caroline Ellison, to explain how Bankman-Fried used Alameda Research to siphon off billions of dollars. of clients' accounts at FTX.
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 an advertising campaign that recruited celebrities such as comedian Larry David and football quarterback Tom Brady.
Ellison, 28, testified that Bankman-Fried directed her when she was CEO of Alameda Research to commit fraud while he pursued ambitions to lead big companies, spend money influentially and run for president of the United States one day. She said he thought he had a 5% chance of becoming president of the United States.
Ellison, crying as he described the collapse of the cryptocurrency empire last November, said the revelations that caused customers to collectively demand their money back, exposing the fraud, brought me a "relief that I didn't have to lie anymore." ".
FTX co-founder Gary Wang, who was FTX's chief technology officer, revealed in his testimony that Bankman-Fried ordered him to insert code into FTX's operations so that Alameda Research could make unlimited withdrawals from FTX and have a line of credit of up to 65 billion dollars. Wang said the money came from customers.
Nishad Singh, former head of engineering at FTX, testified that he was โshocked and horrifiedโ by the outcome of the actions of a man he once admired when he saw the extent of the fraud. He said last November's collapse drove him to suicide.
Ellison, Wang and Singh pleaded guilty to fraud charges and testified against Bankman-Fried in hopes of obtaining leniency in sentencing.
Bankman-Fried was arrested in the Bahamas last December and extradited to the United States, where he was released on a $250 million personal recognizance bond with electronic monitoring and a requirement to remain at his parents' home in Palo Alto, California. .
His communications, including hundreds of phone calls with journalists and internet influencers, along with emails and text messages, eventually landed him in trouble when the judge concluded he was trying to influence potential trial witnesses and ordered him jailed in August. .
During the trial, prosecutors used Bankman-Fried's public statements, online ads and his congressional testimony against him, showing how the businessman repeatedly promised clients that their deposits were safe until last November 7 when he tweeted: โFTX is fine. Assets are fine,โ as customers furiously tried to withdraw their money. He deleted the tweet the next day. FTX filed for bankruptcy four days later.
In his closing, Roos mocked Bankman-Fried's testimony, saying that during his lawyer's cross-examination, the defendant's words were "soft, as if they had been rehearsed many times."
But under cross-examination, โhe was a different person,โ the prosecutor said. โSuddenly, during cross-examination, he didn't remember a single detail about his company or what he had said publicly. It was uncomfortable to hear it. He never said that he couldn't remember during direct examination of him, but it happened more than 140 times during his cross-examination.โ
Former federal prosecutors said the quick verdict โ after only half a day of deliberation โ demonstrated how well the government handled the case.
โThe government tried the case as we expected,โ said Joshua A. Naftalis, a partner at Pallas Partners LLP and a former Manhattan prosecutor. "It was a massive fraud, but that doesn't mean it had to be a complicated fraud, and I think the jury understood that argument."
Associated Press writer Ken Sweet in Palm Springs, California, contributed to this report.
