3rd November 2023 - 3 min read
Founder of FTX, Sam Bankman-Fried has been found guilty of all seven criminal charges made against him, one year after the implosion of his fallen crypto exchange. He was charged with seven counts of wire fraud, securities fraud, and money laundering, committed against FTX customers and lenders of its sister hedge fund, Alameda Research.
Bankman-Fried had faced a month-long trial, which began on 3 October 2023, where prosecutors contended that he stole US$ 8 billion (equivalent to RM38 billion) out of sheer greed. They also accused him of orchestrating “one of the biggest financial frauds in American history”.
To summarise, FTX’s fall began when it was discovered that Bankman-Fried had funnelled money from FTX to Alameda, which also belonged to him. Alameda, in turn, used the money to pay lenders and make loans to Bankman-Fried and other executives. It was also revealed that a substantial portion of Alameda’s assets were held in a native digital token of FTX.
The discovery of these interconnections ultimately spooked investors, causing them to begin pulling assets from FTX, and the exchange eventually filed for bankruptcy in November 2022. The scandal and collapse of FTX also dealt a massive blow to the crypto market in general.
During the course of the court proceeding, Bankman-Fried – who pleaded not guilty to all charges – remained adamant that he did not commit fraud or steal customers’ money, but instead made some business mistakes while running FTX. Among other things, Bankman-Fried admitted that he merely “skimmed” through FTX’s terms of service. He also said that he thought Alameda’s borrowing from FTX was allowed, and only realised that a huge debt was incurred shortly before the fall of his companies.
Following the guilty verdict, Bankman-Fried’s legal team said that it respects the jury’s decision, but are disappointed. “Mr Bankman-Fried maintains his innocence and will continue to vigorously fight the charges against him,” said Mark S. Cohen, Bankman-Fried’s counsel.
Bankman-Fried now awaits sentencing, which has been set on 28 March 2024. He is looking at 110 years in prison, if he receives the maximum sentence on all convicted counts.
Bankman-Fried is also set to go on trial for a second set of charges, which includes bribing foreign officials and bank fraud conspiracies. This trial is scheduled to begin in March next year, and he has also pleaded not guilty to all the charges.
(Source: Reuters)
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