MANHATTAN, NY- Sam Bankman-Fried, the overweight fraudster with a lousy haircut, has been found guilty on fraud charges by a jury in New York federal court this week related to all charges associated with the collapse of his bankrupt cryptocurrency exchange, Fox Business reports. Fried was found guilty on all charges.
The Manhattan-based jury agreed with prosecutors, who sought to prove that Bankman-Fried bilked investors, customers, and lenders in connection with the collapse of his crypto scheme. Among those who got duped by Bankman-Fried were former NFL superstar Tom Brady, his ex-wife Giselle Bunchden, and none other than former President William Jefferson Clinton, the BBC reported.
Bankman-Fried was accused by federal prosecutors of misappropriating and embezzling billions of dollars in deposits to his crypto scheme, FTX, and its sister hedgefund Alameda Research, scheming to mislead investors, and instructing other executives in his business to do the same, Fox Business said.
He was charged with seven counts related to the scheme: two counts of wire fraud and five conspiracy counts. All told the charges carry a combined maximum sentence of 110 years in jail. A sentencing date of March 28, 2024, was set by Judge Lewis Kaplan.
Bankman-Fried’s attorney, Mark Cohen, expressed “disappointment” with “the result.” He signaled his intention to appeal while adding that “Mr. Bankman-Fried maintains his innocence and will continue to vigorously fight the charges against him.”
“Sam Bankman-Fried perpetrated one of the biggest financial frauds in American history,” U.S. Attorney for the Southern District of New York Damian Williams said after the verdict was announced. “The cryptocurrency industry might be new. THe players, like Sam Bankman-Fried, might be new. But this kind of corruption is as old as time.”
Among those testifying against Bankman-Fried were members of his so-called inner circle. The prosecution’s key witnesses were Caroline Ellison, Bankman-Fried’s ex-girlfriend and former CEO of Alameda Research, FTX co-founder Gary Want, and former FTX engineering chief Nshad Singh. All three previously pleaded guilty and agreed to cooperate with the prosecution.
Bankman-Fried took the stand to testify in his own defense, claiming that he made mistakes but insisted he didn’t defraud or steal from anyone.
Bankman-Fried took advantage of the rise in Bitcoin and other digital assets and accumulated an estimated net worth of $26 billion. He used that money to gain political influence and donated to many leftist causes before FTX declared bankruptcy last November.
The crypto exchange collapsed after it was reported FTX merged assets with Alameda, which led scores of customers to withdraw funds; Bankman-Fried was indicted the next month.
Aside from the fraud and conspiracy charges, Bankman-Fried also stands accused of violating campaign finance laws by using funds from FTX customers to make billions in political donations through an illegal straw donor scheme and allegedly bribing Chinese officials.
That trial is scheduled to begin in March. He has pleaded not guilty to all charges in that case as well.
Bankman-Fried was an unlikely billionaire. Frumpy, overweight, with unkempt hair, and dressed like a frat boy, it is shocking that he could dupe otherwise successful people with the 2022 version of Enron.
The BBC reported that according to insiders, life at the company “could sometimes resemble a grown-up math camp, filled with a selection of brilliant misfits and led by the perpetually rumpled Bankman-Fried.
“He was super disorganized, he was always in cargo shorts, he was always sloppy,” a former FTX employee told the BBC. “He would walk around the office in bare feet.”
One employee described those at the top who followed Bankman-Fried without question as “cult-like.”
Another, Natalie Tien, who handled public relations and managed Bankman-Fried’s schedule at the company for more than two years, said he was “charismatic to the point that the company sometimes felt toxic.”
“We trusted him 100%,” she told the BBC. “To a degree that we kind of worried [about] speaking up for ourselves.”
Even when appearing with the rich and famous, such as Bundchen, Clinton, and pop star Katy Perry, Bankman-Fried often wore loose-fitting t-shirts and cargo shorts. Also, for the amount of money he had accumulated, Banman-Fried was unassuming, avoiding luxury cars or yachts, which he easily could have afforded. Instead, he drove a beat-up Toyota Corolla, his attorneys said at trial.
Bankman-Fried also fooled those in finance, including Jim Cramer, the hyperactive host on CNBC. Just two months before the wheels came off, venture capital firm Sequoia Capital “ran a breathless profile of Bankman-Fried in its magazine,” the BBC said. At that time, the company was worth $32 billion.
The author of the since-deleted puff piece, Adam Fisher, touted Bankman-Fried’s efforts to maximize his wealth and impact on the world,” which Fisher admitted involved risk. “But the math couldn’t be clearer,” he wrote.
“To do the most good for the world, SBF [Bankman-Fried] needed to find a path on which he’d be a coin toss away from going totally bust.”
That path would come two months later, in November 2022.
The wheels came off Bankman-Fried’s money train when CoinDesk, a crypto industry news site, published a report alleging Alameda Capital had over half its $15 billion portfolio in FTT–the crypto token printed by FTX. That raised questions about the value of Alameda’s holdings and the apparent conflict of interest between Alameda and FTX, which were supposed to be independent companies.
Shortly afterward, Binance CEO Changpeng Zhao announced he was dumping his substantial stores of FTT. That spelled the end of FTX and outed Bankman-Fried as a fraud.
During his trial, Bankman-Fried attempted to throw Ms. Ellison under the bus, blaming her for failure to “hedge” bets to protect Alameda from a downturn in the market, as he allegedly told her to do.
Meanwhile, the prosecution painted Bankman-Fried as a huckster whose “hubris” led him to “gamble with customer money.”
Ellison even noted that Bankman-Fried saw himself as having a chance at becoming president someday.
“He thought there was a 5% chance he would become president someday,” Ellison testified at trial. “Of the United States.”