Guilty as Charged: SBF Convicted On All Counts
Updated: Nov 5
FTX Founder Sam Bankman-Fried has been found guilty on 7 counts of fraud and conspiracy after the jury took a mere 4 hours to deliberate. The 31-year-old former billionaire was convicted on two counts of fraud and five counts of conspiracy by a 12-member jury in Manhattan federal court following a month-long trial. SBF had taken the stand in the last week to defend his actions as in "good faith" but reports were that the government's cross-examination of SBF was devastating.
With his lieutenants, Caroline Ellison, Gary Want, and Nishad Singh, who were all friends (and in Ms Ellison's case a sometimes romantic partner) with SBF testifying against him, and the evidence drawing damning instances of falsehoods presented to customers, the case has been heading towards this outcome for several weeks.
Prosecutors argued that Bankman-Fried stole USD$8 billion from FTX customers driven by greed. This verdict arrives nearly one year after FTX filed for bankruptcy, leading to a rapid corporate collapse that shocked financial markets and erased Bankman-Fried's estimated USD$26 billion personal fortune.
The trial heard extensive testimonies from former colleagues who accused him of directing them to commit crimes, including helping Alameda loot FTX and misleading lenders and investors about the companies' finances. The defense argued that these witnesses falsely implicated Bankman-Fried to secure leniency at sentencing.
Bankman-Fried has been in custody since August after his bail was revoked due to concerns of witness tampering.
SBF's defense lawyers, who had objected to several rulings by Judge Lewis Kaplan during the trial, are expected to appeal the verdict. Bankman-Fried is also set to face another trial on charges of alleged foreign bribery and bank fraud conspiracies. Once considered a prominent figure in the crypto world, Bankman-Fried's fall from grace now places him among the ranks of individuals convicted of major U.S. financial crimes, including Bernie Madoff, Jordan Belfort, and Ivan Boesky.
The conviction represents a significant victory for the U.S. Justice Department and Damian Williams, the top federal prosecutor in Manhattan, who had prioritised combating corruption in financial markets. The sentencing for Bankman-Fried has been scheduled for March 28, 2024. After the verdict, Mr Williams said:
This case has always been about lying, cheating, and stealing, and we have no patience for it.
Five of the seven charges carry a maximum sentence of 20 years in prison and two of the charges carry a 5 year maximum sentence. SBF has been remanded in custody pending sentencing, so will likely spend Christmas in jail, and be sentenced in February.
In more positive news, the misappropriated assets from FTX and recovered by the trustee in bankruptcy has reached sufficient levels that there is now talk that creditors will receive potentially 90% of the USD$7.3B in recovered assets under a proposed plan of reorganisation and the balance remaining owed to customers is likely to be recovered since the illiquid assets available for sale should be well in excess of that gap. The biggest wildcard is whether the US Internal Revenue Service, which lodged a huge proof of claim, has that claim reduced dramatically (which seems likely). In the meantime many FTX customers have been selling their claims in order to buy more crypto.
By Michael Bacina and Luke Higgins