The founder of the now-defunct cryptocurrency exchange FTX has been convicted of multiple charges, including wire fraud, conspiracy to commit wire fraud, and conspiracy to commit money laundering.
(Photo : Alex Wong/Getty Images)
WASHINGTON, DC - DECEMBER 08: CEO of FTX Sam Bankman-Fried testifies during a hearing before the House Financial Services Committee at Rayburn House Office Building on Capitol Hill December 8, 2021 in Washington, DC.
Bankman-Fried is Guilty
FTX Founder Sam Bankman-Fried has been convicted on seven charges, which encompass wire fraud, conspiracy to commit wire fraud, and conspiracy to commit money laundering.
Bankman-Fried established FTX due to dissatisfaction with existing exchanges utilized by his cryptocurrency trading company Alameda Research. However, allegations from the Securities and Exchange Commission assert that FTX was fraudulent from its inception.
Federal prosecutors urged the judge to impose a sentence of 40 to 50 years on Sam Bankman-Fried, along with an order to pay a judgment exceeding $11 billion. They asserted that the FTX founder perpetrated one of the largest financial frauds in history, victimizing tens of thousands of individuals.
According to Wall Street Journal, Bankman-Fried has displayed no remorse for his actions. Despite a privileged upbringing and promising prospects, the MIT graduate opted to defraud customers of the cryptocurrency exchange and deceive investors.
They described his recent years as characterized by unparalleled greed, hubris, and a willingness to gamble with others' funds. The sentencing for Sam Bankman-Fried is scheduled for March 28.
Also Read: Sam Bankman-Fried is Guilty: Criminal Trial Conclusion Finds Ex-CEO Accountable for All 7 Charges
Following a trial last autumn, a federal jury found the 32-year-old guilty of seven fraud and conspiracy charges. Testimonies from three of his key associates, including his former partner, indicated that they engaged in criminal activities under Bankman-Fried's direction.
Prosecutors alleged that Bankman-Fried embezzled billions of dollars from clients and deceived both customers and lenders prior to the collapse of his cryptocurrency firm, FTX. Despite maintaining his innocence, Bankman-Fried, who testified in his own defense, intends to appeal the verdict.
Following the trial, prosecutors informed the judge that they would not pursue further charges against Bankman-Fried. Instead, they urged the judge to factor in the allegations that would have been addressed in a potential second trial when deciding the sentencing.
Bankman-Fried's legal team previously suggested to the judge that a sentence of approximately five to six years would be suitable. Additionally, they emphasized Bankman-Fried's autism as a factor that renders him especially susceptible to harm while incarcerated.
As Judge Lewis Kaplan prepares to sentence Bankman-Fried, he faces the challenge of weighing the magnitude of financial losses incurred by customers and lenders. Federal sentencing guidelines heavily consider the extent of financial harm, often resulting in lengthy prison terms for white-collar offenses.
According to probation officials, their calculations suggest a sentence of 100 years would be fitting. However, Bankman-Fried's legal team contests this assessment, arguing that the calculation, which hinges on a $10-billion loss, is flawed.
How Did It Start?
The whole situation started when CoinDesk published a big article about how Alameda, the company Bankman-Fried founded, was managing its money.
The article showed that Alameda and FTX, another company Bankman-Fried was involved with, were closely connected, and a big part of their money was tied up in a token called FTT from FTX. When this came out, Binance's CEO decided to sell his FTT holdings.
This caused a chain reaction, leading to FTX going bankrupt and Bankman-Fried stepping down from his position there. Exactly a year after CoinDesk's article, a jury in New York found Bankman-Fried guilty of all the charges against him.
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