FTX crypto-villain Sam Bankman-Fried convicted on all charges
Sam Bankman-Fried, the founder and former CEO of crypto exchange FTX and trading firm Alameda Research, has been found guilty of seven criminal charges.
FTX was once valued at $32 billion, and Bankman-Fried was fêted as a visionary thanks in part to his willingness to spruik his firm, and crypto, to almost anyone willing to put a microphone in front of his face. FTX also spent lavishly on sponsorships and political donations, building a brand that stood out in the scrappy world of cryptocurrency.
But in November 2022 the org filed for bankruptcy. It emerged that FTX had shifted funds to Alameda, which made losing bets. Money moved from FTX to Alameda could not be accessed by FTX investors, leaving them unable to cash out and causing the exchange to collapse.
It soon emerged that FTX had quickly spawned a web of interrelated entities, which the interim CEO appointed to clean up after the collapse rated “a complete failure of corporate controls” and evidence of “a complete absence of trustworthy financial information.”
The source of those quotes, John Ray III, knows financial foul-ups when he sees them: he wound up the notorious energy outfit Enron.
Bankman-Fried was swiftly extradited from the Bahamas, where he had set up shop, and soon faced numerous lawsuits.
One of those actions, United States vs Bankman-Fried, alleged he defrauded stakeholders to the tune of $10 billion and reached court in early October.
On Thursday, the jury empaneled by the US District Court for the Southern District of New York took just four hours to find Bankman-Fried guilty on the following seven charges:
- Conspiracy to commit wire fraud on customers;
- Wire fraud on customers;
- Conspiracy to commit wire fraud on lenders;
- Wire fraud on lenders;
- Conspiracy to commit commodities fraud;
- Conspiracy to commit securities fraud;
- Conspiracy to commit money laundering.
The combined maximum sentences for all of those charges could see Bankman-Fried go away for 110 years.
A key witness in the case appears to have been Bankman-Fried’s sometime romantic partner, Caroline Ellison. She testified that Bankman-Fried directed her to shift around $10 billion from FTX to bail out Alameda. FTX co-founder Gary Wang also testified that Bankman-Fried knew of Alameda’s troubles and of funds shifted to address them, but did not challenge the decisions.
As CEO of a giant financial services outfit, Bankman-Fried should have known the money-shuffle was not appropriate.
Bankman-Fried, an infamously awkward character, testified in his defence and portrayed himself as the victim of the never-ending ructions of the crypto market.
Which clearly did not work – the jury needed just four hours to reach seven guilty verdicts. Sentencing in United States vs Bankman-Fried has been set for March 28, 2024.
Bankman-Fried will probably appeal, making that date moot. But he also faces several other cases that will likely run for years.
FTX has arguably replaced Enron as the ultimate example of corporate incompetence.
The former CEO will therefore get to play his new role as the face of everything that’s wrong with crypto for years come. That’s cold comfort to investors whose faith in the growth of digital assets with no intrinsic value saw them trust FTX to make them money. ®
READ MORE HERE