On November 2, a jury found the former CEO of bankrupt FTX crypto exchange Sam Bankman-Fried (SBF) guilty on all seven counts. The trial lasted a month, but the final verdict will be handed down in March. SBF could face \from a few decades to 115 years in prison.
What the SBF trial was for
On December 13, 2022, the US Securities Commission charged SBF "with defrauding investors in the crypto asset trading platform FTX".
On the same day, the US Attorney's Office filed 8 counts of charges against SBF:
two counts of wire fraud,
two counts of wire fraud conspiracy,
one count of securities fraud,
one count of commodities conspiracy fraud,
one count of money laundering conspiracy,
one count of conspiracy to defraud the Federal Election Commission.
Later, the last charge was dropped, which reduced the political colouring of the proceedings.
On November 11, 2022, the FTX crypto exchange declared bankruptcy and suspended its operations. As it turned out later, FTX, together with cryptocurrency trading firm Alameda Research, the founder of which is also SBF, illegally used the funds of exchange users, e.g. for personal purposes and speculations on the crypto market. All this caused a huge hole in the FTX budget.
On December 21, 2022, SBF was extricated from the Bahamas to the US. He was under house arrest. However, on August 11, the former CEO of FTX was jailed for witness tampering.
Highlights from the SBF fraud trial
On October 3, 2023, the 12-jury trial for SBF began. On November 2, following a month-long hearing, the jury found SBF guilty on all 7 counts. Judge Lewis Kaplan set sentencing for March 28.
Cointelegraph has kept a digest of each of the 17 trials; you can read it here. We will highlight four of the most interesting moments from the hearings:
1️⃣ Caroline Ellison, former head of Alameda Research, said that "FTX basically always allowed Alameda to borrow user funds". Also, at another hearing, she said that, at the direction of SBF, she prepared seven different versions of spreadsheets on Alameda's financial condition for lender Genesis. Her job was to hide a $9.9 billion hole in the balance sheet.
2️⃣ At the hearings, SBF often responded, "I don't remember". It was particularly notable to hear this in response to a question about whether he remembered talking about his company's $13 billion loss.
3️⃣ Other top FTX executives, Nishad Sign, Caroline Ellison, and Gary Wang, have pleaded guilty and participated in this trial as prosecution witnesses. The trials of their cases will come later. By the way, Caroline Ellison and Gary Wang were charged with misappropriation of client funds back in July.
4️⃣ SBF still does not believe he is guilty on any counts. The jury deliberated for 4 hours on their decision and found SBF guilty. However, according to his lawyer, Mark Cohen, "Mr Bankman Fried maintains his innocence and will continue to vigorously fight the charges against him".
Public reaction to the jury's decision on SBF trial
SBF's attorney, Mark Cohen, said they respect the jury's decision but are still disappointed with the result. There will likely be an appeal, although this has not yet been announced by SBF's defence team.
Coinbase board member Kathryn Haun suggested that SBF is looking at decades of incarceration. The maximum cumulative sentence for all charges is 115 years. However, it is unlikely that the judge will hand down such a judgement.
After the latest hearing, New York Southern District U.S. Attorney Damian Williams, who is often involved in investigations of crypto-related frauds, said that "Sam Bankman-Fried perpetrated one of the biggest financial frauds in American history". He added that, despite the youth of the cryptocurrency industry, "this kind of corruption is as old as time".
By the way, before the trial began, Michael Lewis, a well-known journalist and author, published a book called "Going Infinite" about SBF. Lewis has met SBF over a hundred times in two years of working on his book, and "considers Bankman-Fried the most challenging and fascinating character he has ever encountered".
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