FTX Founder Sam Bankman-Fried has been found guilty of all seven charges against him due to his role in the billion dollar collapse of the cryptocurrency exchange.
Bankman-Fried, also known as SBF, was found guilty of seven counts of fraud and wire fraud following a month-long trial held in the New York Federal Court. He will be sentenced on 28 March, 2024, where he could potentially face a maximum 115 years imprisonment.
“The verdict unanimous, your honour” told the jury as SBF looked on from the dock. Once the news of a guilty verdict was announced, US Attorney Damian Williams labelled SBF’s role in the FTX collapse as “one of the biggest financial frauds in American history”.
Williams spoke outside the New York courthouse following the jury announcement: “Sam Bankman-Fried perpetrated one of the biggest financial frauds in American history. This kind of fraud, this kind of corruption is as old as time. We have no patience for it.”
In a statement following the guilty verdict, defence attorney Mark Cohen revealed that they will contest the decision as SBF maintains his innocence and will “vigorously fight the charges”.
This verdict comes a year to the day (2 November, 2022) when CoinDesk unveiled solvency problems in the books of SBF’s crypto hedge fund Alameda Research, shown to have up to $14bn of FTX investor assets balanced out by the exchange’s native token FTT.
This ultimately set the wheels in motion for FTX’s downfall, as the company announced bankruptcy on 7 November, 2022 which left several billions of dollars of customer funds lost.
SBF, and his most trusted executives Caroline Ellison – CEO of Alameda Research – and Gary Wang – Co-Founder of FTX – were all arrested and subsequently charged on fraud and wire fraud in December, 2022.
Whilst SBF pleaded not guilty and was released from prison on a $250m bond in January, Ellison and Wang both pleaded guilty and agreed to cooperate with prosecutors, ultimately testifying against the former crypto kingpin in last month’s trial.
Ellison stated in court she would “always ultimately defer to Sam” and despite her stating that SBF believed it would be “important to separate Alameda and FTX”.
She also admitted Alameda was receiving money from FTX for its own personal investments to make Alameda’s balance sheet “look less risky to investors”.
Ellison, as well as former FTX engineer Nishad Singh, gave damning testimonies against SBF painting the story of him being the key decision maker behind the crypto exchange before and during the company’s financial crisis.
SBF’s defence team argued that the ex-FTX CEO was overworked and made mistakes believing company funds belonged to other companies as opposed to investor assets.
The FTX Founder admitted there were “significant oversights” on his behalf but maintains he did not nor intend to defraud any customer or investor of their funds.
The FTX collapse is the most high-profile crypto exchange collapse in the sector’s relatively short history. The downfall spawned a market crash that it is still trying to recover from.
Even more so, the collapse intensified government discussions around the world of security and privacy regulations in the crypto sector as SBF and the downfall of his billion dollar empire did not help the sector’s existing ‘wild west’ persona.