Sam Bankman-Fried Is Found Guilty on All Counts
Reading Time: 3 minutesThe Meager Defense Didn’t Work: Sam Bankman-Fried Is Found Guilty on All Counts, He faces up to 110 years in prison., Sam Bankman-Fried is guilty. He faces up to 110 years in prison.
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He did not go infinite. He never reached the moon.
On Thursday, a federal jury in Manhattan found Sam Bankman-Fried guilty on seven counts of wire fraud, conspiracy to commit wire fraud, and conspiracy to commit money laundering. The former CEO of the high-flying crypto exchange FTX (and founder of a sister hedge fund, Alameda Research) had been the subject of a high-profile trial all last month, which simultaneously served as something of a reckoning for the cryptocurrency industry whose ascent mirrored Bankman-Fried’s. In court, the prosecution alleged that Bankman-Fried inappropriately took his customers’ money to spend on everything from luxury real estate to venture investments to celebrity endorsements to political donations; when confidence in FTX plummeted and customers tried to get their deposits back, a staggering $8 billion was missing and the company collapsed. Meanwhile, Bankman-Fried’s defense team told a different story, one in which a well-meaning CEO in a fast-shifting industry screwed up a few things like risk management, made ‘reasonable business expenses,’ and was ultimately backstabbed by former confidantes trying to save their own hides.
The jury went with the first story. It convened for nearly six hours on Thursday before delivering its verdict. In total, Bankman-Fried faces a maximum of 110 years in prison. His actual sentence will be determined in March.
Here’s what happened in the courtroom, which was deathly silent just before 7:45 p.m., despite being packed with lawyers, reporters, marshals, and assorted observers. Andy Mohan, Judge Lewis Kaplan’s deputy clerk, walked in and announced gravely into a small microphone that the jury had reached a verdict, drawing sharp gasps, head turns, and notebook squiggles. When Kaplan entered and received the jury’s note, he immediately announced that there were to be ‘no demonstrations, no shouting, and no people running through the doors.’ We were to stay put, unspeaking and unmoving, until the jury was discharged.
The jury headed in, and the forewoman read out the rulings, each of them rumbling like an earthquake. Counts 1, 2, 3, 4, 5, 6, 7: guilty. Almost as one, observers looked toward Bankman-Fried’s parents; Barbara Fried’s hand was pressed firmly over her closed eyes, her glasses pushed up to her forehead. Bankman-Fried himself started to sit, before standing back up—the jury wasn’t finished yet. On the money-laundering charge, was the jury convicting the defendant based on concealment, wire frauds proceeds, or both? ‘Both,’ said the forewoman. One by one, the jurors gave their ‘guilty’ assents, making its unanamity official. After the jury was discharged, observers quickly ventured outside the courthouse, where U.S Attorney for the Southern District of New York Damian Williams gave a rare statement in front of the courthouse.
Thursday’s verdict marked exactly one year since CoinDesk’s publication of the leaked Alameda Research balance sheet that knocked over the first dominoes for Sam Bankman-Fried’s empire—and, ultimately, brought us to this moment.
FTX was worth $32 billion at its peak, a pandemic-era darling boosted by near-zero interest rates and lockdown-imposed boredom. It put its name on an arena and celebrities in its ads; Bankman-Fried cultivated an image as a wild-haired savant, a former Wall Street quant who became a crypto luminary in the name of giving away his wealth to erase poverty and avert planetary destruction. He was an eccentric founder in the Silicon Valley mold, except he ultimately based his businesses in Hong Kong and the Bahamas, where cryptocurrency regulations were ostensibly friendlier.
Bankman-Fried’s companies appeared as though they would weather the industry downturn that afflicted crypto businesses beginning in 2022 (around when interest rates rose), but by that fall, following the Alameda balance sheet leak that showed its holdings were full of potentially worthless coins that FTX itself had created—not to mention suspicions stoked by an industry rival, the head of the exchange Binance—FTX itself was toast. Amid the equivalent of a bank run, the company had to block withdrawals. Customer deposits were missing. FTX declared bankruptcy. Bankman-Fried embarked on an ill-advised media tour. And soon he was in jail, first in the Bahamas and then back in the U.S.
All these months later, his federal trial was colorful, dramatic, and—unmistakably, bafflingly—one-sided. Members of his former inner circle (including his ex-girlfriend Caroline Ellison, his handpicked CEO of Alameda) testified that he instructed them to funnel user funds into an Alameda account and then lie about it. SBF’s late-2022 media appearances came back to bite him. His defense was limp. And finally he himself took the stand, for worse or for really worse.
It was widely seen as a Hail Mary. On Thursday, we learned what that got him.
Reference: https://slate.com/technology/2023/11/sam-bankman-fried-is-guilty.html
Ref: slate
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