Sam Bankman-Fried, the founder of cryptocurrency exchange FTX, has been found guilty of committing one of the most significant financial frauds to date, particularly in the blockchain and cryptocurrency industry.
A 12-member jury in Manhattan federal court unanimously convicted Bankman-Fried on all seven counts, including two counts of fraud and five counts of conspiracy, following a lengthy legal process.
FTX was once a leading cryptocurrency exchange with a valuation of $32 billion, but it collapsed in a matter of days in November 2022.
FTX’s collapse was triggered by a report from CoinDesk highlighting potential leverage and solvency concerns involving FTX-affiliated trading firm Alameda Research.
The report raised questions about FTX’s financial stability and led to a liquidity crisis. FTX’s collapse was also attributed to mismanagement of funds, lack of liquidity, and the large volume of withdrawals.
This led to the firm being unable to meet its financial obligations, resulting in the company filing for bankruptcy. Following the bankruptcy declaration, the firm, SBF, and other staff have been going through legal battles in the US.
The prosecution argued that Bankman-Fried had looted a staggering $8 billion from the exchange’s users out of sheer greed, leading to the rapid collapse and bankruptcy of FTX.
According to Damian Williams, the top federal prosecutor in Manhattan, “The crypto industry might be new, and the players like Sam Bankman-Fried may be new, but this kind of fraud is as old as time, and we have no patience for it.”
While SBF has been found guilty, it’s important to note that his sentencing is scheduled for March 28, 2024, with the potential of facing decades in prison.
This is also not the end of Bankman-Fried’s legal battles, as he is scheduled to face a second set of charges in March, including allegations of foreign bribery and bank fraud conspiracies.
In response to the conviction, SBF’s counsel believes that the circumstance is not hopeless as they will continue to fight in court for the founder of FTX.
