Just a year ago, Sam Bankman-Fried was rich. More than $20 billion. And he was celebrated as a fine guy in the crypto industry, his face was emblazoned on posters and magazines. Then on November 2, 2022, a document came to light that triggered the collapse of his cryptocurrency exchange FTX – and exactly one year later to the day, Bankman-Fried has now been convicted. On Thursday, a New York jury found him guilty on all seven counts, including fraud, conspiracy and money laundering. He is said to have embezzled eight to ten billion dollars in customer money in order to speculate and finance his extravagant lifestyle.
Bankman-Fried committed “one of the largest financial frauds in American history,” said Manhattan District Attorney Damian Williams: He set up a “multibillion-dollar scheme” that was supposed to make him the “king of cryptocurrency.” During the verdict, Bankman-Fried showed little visible emotion as a juror repeated the word “guilty” seven times, then sat down with his head bowed.
As officers led him out of the hall, he nodded briefly to his parents. Barbara Fried choked back a sob and Joe Bankman put his arm around her shoulders. Bankman and Fried are law professors at Stanford University in California, where Joe Bankman researched, among other things, the draining of tax havens. Both parents are Democrats and are considered do-gooders.
Her now convicted son Sam, a nerd type, was bored at school, often spent school holidays in math camps, dealt with algorithms and formulas and quickly figured them out. After studying physics at MIT in Boston, he took a job as a trader at Jane Street Capital on Wall Street. In 2017 he set up his own business with the brokerage firm Alameda and founded the crypto exchange FTX in 2019, which quickly became the most important trading platform for Bitcoin and other cryptocurrencies and was most recently valued at $32 billion. And Bankman-Fried also took care of the image: He paid A-list celebrities such as football star Tom Brady, actor Larry David and basketball player Steph Curry to advertise FTX.
Three former friends weighed heavily on Bankman-Fried
Bankman-Fried marketed himself as an extraordinary billionaire: he tried to earn as much as possible as quickly as possible in order to later donate some of it to charity. He lived with his employees in a palatial penthouse in the Bahamas, where he was arrested in November 2022. In exchange for bail of $250 million, he was allowed to live under house arrest at his parents’ estate in California, but then had to go to prison in August because he was said to have tried to tamper with witnesses.
Three of his former friends and colleagues had weighed heavily on him in the process since the beginning of October: Alameda boss Caroline Ellison, FTX co-founder Gary Wang and head of technology Nishad Singh. All three had pleaded guilty and testified against Bankman-Fried – probably in the hope of avoiding prison themselves. Ellison, who is also Bankman-Fried’s ex-girlfriend, fought back tears in court as she testified that they conspired to doctor financial statements she sent to lenders. Chief Technology Officer Singh testified that he was suicidal at the same time. Prosecutors argued that Bankman-Fried repeatedly lied to customers, lenders and investors and used their funds to enrich himself. She brought forward evidence against him from her analysis of millions of pages of internal messages, spreadsheets and memos.
Bankman-Fried tried in court to portray FTX’s collapse as the unfortunate result of faulty accounting, saying he lost track of his companies’ finances at some point and admitting errors in corporate governance. However, he did not intentionally cheat and pleaded not guilty to all charges. However, the 31-year-old did not cut a good figure under cross-examination; lead prosecutor Danielle Sassoon managed to uncover contradictions between his private life and his public statements.
The jury’s nine women and three men were convinced: they deliberated for just over four hours before finding the defendant guilty on all counts. His lawyers indicated that they would lodge an appeal. At worst, Bankman-Fried faces 110 years in prison, the length of which will be announced at the end of March next year. And that’s not all: a second trial against him is scheduled for the beginning of 2024, including for illegal campaign financing.