FTX Founder Sam Bankman-Fried Found Guilty in Landmark Crypto Fraud Case
In a landmark decision former crypto currency tycoon and FTX founder Sam Bankman-Fried, has been found guilty on all counts in a month long trial in New York.
Marking a stunning fall from grace for the 31 year old who was once hailed as the "King of Crypto."
Bankman-Fried whose crypto currency exchange FTX was once valued at USD 32 billion now faces the possibility of a maximum prison sentence of 115 years one of the largest sentences handed down in Crypto Currency sector to date.
The jury consisting of 12 members delivered their verdict after just over four hours of deliberations. Bankman-Fried, who had previously pleaded not guilty to two counts of fraud and five counts of conspiracy, stood before the court and clasped his hands together as the guilty verdict was read.
Trial Focal Point
The trial revolved around allegations that Bankman-Fried had embezzled approximately USD 8 billion from FTX's customers leaving the once thriving crypto currency centralised exchange (CEX) in shambles and erasing his estimated $26 billion personal fortune.
Prosecutors argued that he funnelled the funds to his crypto focused hedge fund, Alameda Research.
Despite publicly assuring the safety of customer assets. Alameda Research allegedly used these funds for various purposes including paying off lenders, making speculative investments, and even making political contributions to promote favourable crypto currency legislation.
Throughout the trial Bankman-Fried took the risky step of testifying in his own defence attempting to convince jurors that he had not acted with criminal intent but had made mistakes in running FTX. He argued that he was unaware of the extent of the financial problems until shortly before the collapse of both companies
But the Jury did not appear to be sympathetic to Sam's pleas and testimonial that he did not have bad intentions, despite his testimony it appears to have not helped his cause.
Ex-Partner Testifies Against Sam
Former FTX CEO Caroline Ellison one of Bankman-Fried's associates and on and off again girlfriend, was a star witness in the trial . She testified that they had embezzled "around USD 14 billion" from FTX customers before its bankruptcy using the funds to support Alameda Research and its various activities.
Bankman-Fried's defence claimed that he had acted in "good faith" and was overwhelmed by circumstances and the financial ineptitude of close associates who testified against him to seek leniency from prosecutors.
Sentencing for Bankman-Fried is scheduled for March 28, 2024. His defence lawyers are expected to appeal the verdict and he also faces a second trial on additional charges. Including foreign bribery and bank fraud conspiracies which relate to transferring crypto funds to Chinese officials in an attempt to have accounts unfrozen.
The conviction represents a significant victory for the US Justice Department and Damian Williams, the top federal prosecutor in Manhattan who made the eradication of financial market corruption a top priority.
United States Focuses Crypto Financial Crimes
The trial of Sam Bankman-Fried has been closely watched by the crypto currency industry as a whole. The collapse of FTX and the subsequent legal proceedings have underscored the challenges and risks in the sector. With the absence of specific regulations for crypto currencies in the United States.
Legal battles are expected to continue in both courts and civil cases litigated by regulatory agencies like the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC).
Bankman-Fried's once impressive rise in the crypto world where he was known as "the king of crypto," now mirrors a fall from grace shared by other notable figures convicted of major US financial crimes such as Bernie Madoff, Jordan Belfort, and Ivan Boesky.
Given this is the first Centralised Exchange to be focused and successfully held accountable the outlook that more will be in the sights of the U.S regulators is certain. Terra (Luna) Network founder, Do Kwon is currently being held and awaits trial.
Given the outcome for Sam, Do Kwon might be shivering in his boots as he awaits his day in court.
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