Investment News 03-11-2023 02:02 27 Views

Jury returns verdict in Sam Bankman-Fried fraud trial

A jury has found Sam Bankman-Fried Thursday guilty on all counts in the fraud trial against the former crypto billionaire.

CNBC reported at around 4:55 p.m. Pacific time that the jury found Bankman-Fried guilty. The verdict was reached around four hours after the jury began deliberations.

The co-founder of the digital currency exchange FTX was charged with seven counts of wire fraud, securities fraud and money laundering that defrauded customers of his digital currency exchange, FTX, and lenders to its affiliated hedge fund, Alameda Research.

He faces up to 115 years in prison, according to CNBC.

FTX and Alameda quickly collapsed in November 2022 after some of their financial liabilities were exposed. The fact that Alameda had taken billions of dollars from FTX’s customers, and that much of Alameda’s balance sheet was comprised of digital currency assets it had created, was central to the case against Bankman-Fried.

Unnerved by disclosures about the firm’s financial position, many of FTX’s customers tried to get their money back. That set off the equivalent of a bank run. The value of Alameda’s investments crashed, and FTX couldn’t return much of that money because it had been given to Alameda. Some went to the fund’s lenders, and billions were spent on sponsorships, commercials, and loans to top executives. That, too, was a major part of the case against Bankman-Fried.

Much of FTX and Alameda’s leadership were also charged after the firms went under. Former Alameda CEO Caroline Ellison, FTX co-founder Gary Wang, and FTX technology chief Nishad Singh all pleaded guilty to the charges against them. They agreed to cooperate with the prosecution and testify against Bankman-Fried in exchange for lighter sentences.

Bankman-Fried’s lawyers contended that he did not intend to defraud anyone and that the government was looking for someone to blame after the failures of FTX and Alameda.

Forbes had once estimated that Bankman-Fried’s stakes in Alameda and FTX were worth $26 billion. He was 29 at the time. But after the bankruptcies, that was gone. Criminal charges followed weeks later.

He also faces another trial on charges of bribing foreign officials and other counts. That trial is scheduled to begin in March, and Bankman-Fried has pleaded not guilty to all charges.

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