Sam Bankman-Fried, the founder and former CEO of defunct crypto exchange FTX, has been pronounced guilty on all seven criminal charges following a trial that spanned over four weeks. His sentencing is set for March 28, and he could face up to 110 years in jail.
On Nov. 2, a jury convicted Bankman-Fried of seven criminal charges, which included wire fraud, conspiracy to commit wire fraud, and money laundering. Mark Cohen, Bankman-Fried's attorney, expressed disappointment with the verdict despite respecting the jury's decision. "Mr. Bankman Fried maintains his innocence and will continue to vigorously fight the charges against him," Cohen said.
U.S. Attorney Damian Willaims termed Bankman-Fried one of the biggest financial con artists in U.S. history who orchestrated "a multibillion-dollar scheme designed to make him the king of crypto," CoinTelegraph reported. He is currently held at the Metropolitan Detention Center in Brooklyn until his March sentencing following his bail revocation in August.
In addition to current charges, he may face a second trial beginning March 11 for allegations such as bribery conspiracy and bank fraud conspiracy, according to CoinTelegraph, with Feb. 1 as the deadline for prosecutors to decide whether they want to pursue this second trial.
Williams issued a statement denouncing this kind of corruption by saying, "The cryptocurrency industry might be new and players like Sam Bankman-Fried might be new but lying, cheating, and stealing are not." He further stated that such acts had no room in their jurisdiction, as reported by NPR.
Prior to the collapse of his company last November, Bankman-Fried was living an extravagant lifestyle while residing in a $35 million penthouse. The unraveling began when FTX customers started to withdraw their funds in November after seeing warning signs about the financial health of the exchange. This resulted in an effective bank run that exposed FTX's insolvency. The company filed for bankruptcy on Nov. 11, and Bankman-Fried was extradited from the Bahamas one month later.
The crypto exchange reportedly had approximately $16 billion in customer funds prior to its collapse, and so far, only $7.3 billion has been recovered by new management towards paying back customers. The Wall Street Journal's analysis indicates that a full repayment is unlikely because FTX insiders spent the other $7.7 billion.
FTX's downfall reveals more than just cryptocurrency-related issues, according to Sean Stein Smith, Forbes contributor, business and economics professor at the City University of New York, and a member of the advisory board for the Wall Street Blockchain Alliance. The problems were rooted in poor management and unsound business practices, as he notes "FTX had an absence of internal controls over financial reporting" and lacked both a CFO and an external board of directors.
