The former CEO of collapsed crypto exchange FTX is facing more than 100 years in prison in a landmark decision
Sam Bankman-Fried, the founder and former CEO of FTX, the disgraced crypto exchange that was one of the world’s largest at its peak, has been found guilty of defrauding customers by a federal jury in New York on Thursday, November 2. He faces up to 125 years in prison and a forfeiture of $1.2 billion, the amount he is said to have stolen from FTX customers.
The 31-year-old was accused of using customer funds to make risky bets on the price of Bitcoin and other cryptocurrencies and then covering up the losses with false accounting and misleading statements. He also allegedly manipulated the market by creating fake trading volume and inflating the prices of FTX tokens.
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His trial was one of the most high-profile cases in the crypto industry, attracting widespread media attention and public interest. The FTX empire collapsed following an article that exposed the undisclosed mixing of funds and Binance boss Changpeng “CZ” Zhao’s announcement to withdraw from the exchange. Consequently, Bankman-Fried resigned and FTX filed for bankruptcy. He was later charged with civil and criminal fraud and money laundering offences.
Once the darling of the crypto world, Bankman-Fried had been hailed as a visionary leader and philanthropist, who donated millions to various causes such as climate change and malaria.
In 2021, he was ranked as the second-richest person in crypto by Forbes, with a reported net worth of $16.2 billion.
Bankman-Fried maintained his innocence throughout the trial, claiming that he acted in good faith and that FTX was a victim of market manipulation and hacking. He also argued that he did not violate any laws or regulations, as the crypto industry was largely unregulated and decentralised.
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But his defence was undermined by the testimony of his former associates, including Caroline Ellison, the CEO of Alameda Research, a hedge fund he founded. Ellison pleaded guilty to fraud and conspiracy charges in exchange for cooperating with the prosecutors. She testified that Bankman-Fried instructed her to use Alameda’s funds to prop up FTX’s liquidity and profitability, and that he falsified FTX’s financial statements and audit reports.
Bankman-Fried’s guilty verdict is a major blow to the crypto community, which had seen him as a role model and innovator. Many crypto supporters expressed their shock and disbelief on social media, while others questioned the fairness and legitimacy of the trial.
Bankman-Fried’s lawyers said they would appeal the verdict and seek a new trial. They also said they hoped that the case would prompt more clarity and guidance from regulators on operating in the crypto space.
The sentencing date for Bankman-Fried has yet to be set. He remains in custody until then.