SBF was guilty on all counts as the jury found he defrauded investors

BF was guilty on all counts as the jury found he defrauded investors

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Sam Bankman-Fried was convicted of seven of seven criminal counts of defrauding FTX customers, lenders and investors, Inner City Press reported.

Sam Bankman-Fried was convicted of defrauding customers, lenders and investors of FTX, the cryptocurrency exchange he founded and led until its dramatic collapse a year ago, which caused customers to lose billions of dollars in what prosecutors called “one of the largest financial fraud in US history."

Bankman-Fried was found guilty of two substantive crimes, wire fraud on FTX lenders and customers, and five conspiracy crimes, which included conspiracy to commit wire fraud charges along with commodities fraud, securities fraud, and money laundering, Inner City Press reported. He faces up to 115 years in prison.

As the verdict was read, Bankman-Fried's father, Joseph Bankman, sat with his head in his hands, while her mother, Barbara Fried, bowed her head. The couple was present almost the entire day of the trial. As the jury departed, they hugged each other tightly.

They waited for Bankman-Fried behind a courtroom divider but he was quickly ushered out of the room. About halfway out of the room, Bankman-Fried turned and smiled at her parents.

“We respect the jury's decision,” Bankman-Fried's attorney, Mark Cohen, said in a statement. "But we are extremely disappointed with the outcome. Mr. Bankman Fried maintains his innocence and will continue to vigorously fight the charges against him."

Crypto crash

Bankman-Fried's crypto empire collapsed dramatically a year ago after the FTX exchange he led as CEO and its sister trading firm, Alameda Research, which Bankman-Fried founded and co-owns, were unable to recover from huge holes in their balance sheets that led to losses. customers lost billions.

Bankman-Fried was later arrested in the Bahamas and extradited to the US. He has been jailed for the duration of the trial after his bail was revoked in August because prosecutors accused him of witness manipulation by leaking the private diaries of his and former colleagues. his girlfriend Caroline Ellison told the New York Times and used an encrypted messaging app to contact potential witnesses.

The trial itself has attracted attention in the crypto industry over the past year following the crash of exchanges as investors suffered and the industry itself sought to distance itself from Bankman-Fried.

The former billionaire himself took the stand near the end of the trial, but his testimony failed to convince the jury to acquit him. Bankman-Fried told the jury he thought until the final days Alameda and FTX could be saved. He admitted wrongdoing and said FTX had a “lack of oversight,” but his lead attorney, Mark Cohen, argued that poor business decisions were not a crime.

Prosecutors, in their closing arguments, emphasized that Bankman-Fried was one of the conspirators who had knowledge of the fraud, pointing to the testimony of three former FTX executives – Ellison, who was CEO of Alameda research, former FTX CTO and co-founder Gary Wang, and former Chief Engineering Officer Nishad Singh — as irrefutable proof that Bankman-Fried knows more than he admits about his empire's finances. All three co-conspirators have pleaded guilty to various charges, although none have been sentenced.

What's next

Judge Lewis Kaplan scheduled sentencing for March 28.

Bankman-Fried's attorneys may decide to appeal on two issues – one regarding his limited ability to offer legal counsel, and another regarding the judge allowing a pre-testimony hearing at which the government could question the former FTX CEO. said Samson Enzer, partner at Cahill, Gordon & Reindel. Enzer is a former federal prosecutor in the US Attorney's Office for the Southern District of New York, where he handled numerous crypto-related cases.

The presence of the defense argument means Bankman-Fried asserts that the attorney is present when conducting her business and the attorney's presence gives her comfort that what she is doing is OK.

“I don't think they will win. "I think the government will win the appeal, but I expect the government will argue," Enzer said.

Bankman-Fried still faces five more charges in a trial currently scheduled for March 2024, including fraud against FTX customers in connection with the purchase and sale of derivatives, securities fraud against investors in FTX, and three conspiracy counts: bank fraud, operating a money transfer business without permission, and violated the bribery laws in the Foreign Corrupt Practices Act.

If the government still pursues additional charges, the court would like to postpone the sentence. However, Enzer said he wouldn't be surprised if the government dropped the lawsuit or tried to find a way to resolve it.

What SBF's confidence means for crypto

“I think this is a positive message in the sense of telling the world, look, fraud is still fraud, whether the fraud occurs on Wall Street or on the blockchain,” Enzer said. "This will be aggressively enforced."

Investors must then have confidence that their rights against fraud will be protected and bad actors will be removed, Enzer said.

“What we're left with are the good actors, the people who I think are the majority,” Enzer said. “People who are trying to do things that make the world better.”

Enzer said the trial itself had produced its own findings that had nothing to do with the outcome.

“This trial is like an autopsy on the company's lack of compliance and good controls and should provoke thought in the industry about what we need to do to ensure that we safeguard customer assets, that we protect our customers. and counterparties that we control well and we manage risks adequately including hedging when we make investment decisions," said Enzer.

The trial also raises questions about the crypto industry's approach to recordkeeping and what modes of communication are appropriate and whether they should be maintained, Enzer said. Prosecutors argued that Bankman-Fried's use of the automatic deletion policy was evidence of his fraudulent and criminal intent.

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