Sam Bankman-Fried, the founder of FTX, has been found guilty on all charges and could potentially face decades in prison. Not too long ago, Bankman-Fried was known as the crypto king and the founder of one of the largest cryptocurrency exchanges. Today, he is in disfavor with the judicial authorities.
The legal dispute against him lasted about a month, and the jury’s verdict didn’t seem to be a tough call. In just 5 hours of deliberation, they reached a unanimous guilty verdict on all charges.
Several charges were filed against Sam Bankman-Fried, including fraud and money laundering. The final sentencing for the former crypto king is scheduled for March 28 next year.
Sam Bankman-Fried has been convicted of misappropriating client funds and abusing his position within FTX to enrich himself and his family. The jury found that he had misled investors, lenders, and misappropriated client funds.
He will be remembered as the man who orchestrated one of the largest frauds in recent history. At one point, FTX’s value was estimated at $32 billion.
Despite being found not guilty on all counts of the indictment, it seems he had little chance of an acquittal, especially after close collaborators and friends testified against him. His former girlfriend and director, Carole Allison, also testified for the defense.
His three close collaborators, who are awaiting sentencing, testified in the hope of receiving reduced sentences. Their sentences will be pronounced later, and as of now, there is no official announcement regarding the extent of their punishments.
Nevertheless, Bankman-Fried is facing the possibility of spending the rest of his life in prison, which is the maximum sentence. Five of the charges carry a maximum sentence of twenty years, while two of them carry a maximum sentence of five years, totaling 110 years.
Throughout the case, the prosecution sought to convince the jury that Bankman-Fried knew exactly what he was doing. The defense, on the other hand, attempted to portray him as an innocent and inexperienced mathematician who made an error with good intentions.
During the trial, the prosecution revealed that the FTX founder had donated tens of millions of dollars to U.S. political parties. These allegations could be part of a separate legal dispute, and a decision on whether this dispute will even commence will be made no later than February, as reported by BBC.
Before the collapse of FTX, Sam Bankman-Fried was hailed as a “wunderkind.” He was often seen in the company of public figures and was sought after for insights into the industry. FTX is a cryptocurrency exchange based in the Bahamas, founded in 2019.
The story of FTX cannot be told without Alameda Research, another company founded by Sam Bankman-Fried. The company made profits through arbitrage. They realized that Bitcoin in the U.S. was $10 cheaper than Bitcoin in Japan, so they bought cheap and sold expensive. They started with $200 and scaled up to $10-15 million per day.
In 2019, they began working with all major exchanges and even helped Binance with large transactions. So, when Sam decided to create his own futures trading exchange, FTX, Binance was one of the first investors.
Like other exchanges, it allowed customers to exchange money for cryptocurrencies. In July 2021, the exchange had one million users. During this period, FTX was the third-largest exchange by trading volume.
However, in November 2022, the exchange did not have sufficient funds to meet all of its customers’ demands, ultimately leading to its bankruptcy. You can read more about the collapse here.
The Securities and Exchange Commission alleges that SB-F commingled the funds of FTX clients with Alameda to make “undisclosed investments, extravagant real estate purchases, and large political contributions.”