After a month-long trial in New York, Sam Bankman-Fried, the former CEO of one of the largest cryptocurrency exchanges in the world, was found guilty of fraud and money laundering.
The jury deliberated for less than five hours before returning its decision.
It brings an end to the astonishing decline in fortune for the 31-year-old former billionaire, who was formerly dubbed the “King of Crypto” and is currently facing decades imprisonment.
FTX, Bankman-Fried’s company, filed for bankruptcy last year, leading to his arrest.
His sentence is scheduled for March 28 of the following year.
When cryptocurrency exchange FTX filed for bankruptcy in November of last year, $8 billion in customer cash were missing from its formerly $32 billion (£26 billion) valuation.
Following the decision, US attorney Damian Williams released a statement saying, “Sam Bankman-Fried perpetrated one of the biggest financial frauds in American history – a multibillion-dollar scheme designed to make him the king of crypto.”
“This case has always been about lying, cheating and stealing, and we have no patience for it,” he stated.
While his parents sat with their heads in their hands, Bankman-Fried stood before the jury with his hands clasped as the verdict was read.
He was found guilty by the jury of deceiving lenders and investors and embezzling billions of dollars from FTX, which contributed to the company’s demise. Seven charges of money laundering and fraud have been brought against him.
He had entered a not guilty plea to every accusation, arguing that despite his shortcomings, he had behaved honorably.
The parents of Bankman-Fried sat with their heads buried in their hands.
Following the verdict, Mark Cohen, Bankman-Fried’s attorney, stated: “We honor the jury’s choice. However, we are rather dissatisfied with the outcome.
“Mr Bankman-Fried maintains his innocence and will continue to vigorously fight the charges against him,” he stated.
When the BBC asked Bankman-Fried’s representative if he intended to appeal the verdict, he did not answer right away.
In an attempt to get their sentences reduced, three of his former close friends and coworkers—including his ex-girlfriend Caroline Ellison—pleaded guilty and consented to testify against him.
Their sentencing is scheduled for a later time.
The prosecution produced proof that, in the early days of the exchange, when regular banks refused to allow it to create an account, FTX customers sent deposits to Bankman-Fried’s cryptocurrency trading company, Alameda Research.
Rather than protecting those monies, as Bankman-Fried had publicly promised to do on several occasions, he spent the money to pay back Alameda lenders, purchase real estate, make investments, and make political contributions.
The maximum sentence for the five crimes for which Bankman-Fried was found guilty is 20 years in jail, while the maximum sentence for the remaining two charges is five years.
That means that Bankman-Fried could receive a sentence of decades to come, though it is unlikely that the judge will actually impose the maximum of 110 years.
Upon FTX’s bankruptcy, Alameda owed the company $8 billion.
“He accepted the cash. He was aware of its error. During his closing remarks, assistant US attorney Nicolas Roos stated, “He did it anyway, because he thought he was smarter and better and that he could figure his way out of it.”
In an attempt to persuade jurors that the prosecution had not produced sufficient evidence to support his claim of criminal intent, Bankman-Fried took the bold decision to testify on his own behalf.
He was portrayed by his lawyer, Mr. Cohen, as a nerdy mathematician who was overtaken by his companies’ explosive growth. “There was bad judgment,” he said.
“That does not constitute a crime.”
In his testimony, Bankman-Fried maintained that the money transfers between his companies were “permissible” and stated that, until a few weeks prior to the FTX collapse last year, he was mainly ignorant of the financial hole that his deputies had revealed.
Many clients were unable to get their money back after the collapse.
Since then, attorneys handling the bankruptcy case have stated that they have retrieved the great majority of the funds that were lost.
The implications of Bankman-trial Fried’s for the cryptocurrency industry, which hasn’t been able to bounce back from last year’s market turbulence, were being keenly observed.
He has been viewed as a symbol of the industry’s woes, which top US authorities have called replete with illegality.
Prior to the demise of his businesses, he was well-known for his celebrity connections and for often appearing in Washington and the media to talk about the industry.
He gained the title of “the king of crypto” due to the explosive expansion of FTX and his deal-making during the market slump that affected other cryptocurrency companies last year.
Renato Mariotti, a former federal prosecutor, said that US courts will continue to be the scene of disputes about the cryptocurrency industry because Congress is unlikely to enact new regulations for the sector anytime soon.
“I really think having specific crypto regulations in the United States would reduce the sort of crime that occurred in this particular case,” he stated.
Regulating will, regrettably, not likely happen anytime soon. However, it does indicate that the battle will go on in court and in civil proceedings brought by the US financial regulators Securities and Exchange Commission and Commodity Futures Trading Commission, he continued.