FTX founder Sam-Bankman-Fried convicted of defrauding cryptocurrency customers

U.S. Attorney Damian Williams said they engaged in one of the biggest frauds in U.S. history.

Associated Press

Nov 3, 2023, 12:12 AM

Updated 172 days ago

Share:

FTX founder Sam-Bankman-Fried convicted of defrauding cryptocurrency customers
NEW YORK (AP) — FTX founder Sam Bankman-Fried’s spectacular rise and fall in the cryptocurrency industry — a journey that included his testimony before Congress, a Super Bowl advertisement and dreams of a future run for president — hit a new bottom Thursday when a New York jury convicted him of fraud in a scheme that cheated customers and investors of at least $10 billion.
After the monthlong trial, jurors rejected Bankman-Fried’s claim during four days on the witness stand in Manhattan federal court that he never committed fraud or meant to cheat customers before FTX, once the world’s second-largest crypto exchange, collapsed into bankruptcy a year ago.
“His crimes caught up to him. His crimes have been exposed,” Assistant U.S. Attorney Danielle Sassoon told the jury of the onetime billionaire just before they were read the law by Judge Lewis A. Kaplan and began deliberations. Sassoon said Bankman-Fried turned his customers’ accounts into his “personal piggy bank” as up to $14 billion disappeared.
She urged jurors to reject Bankman-Fried’s insistence when he testified over three days that he never committed fraud or plotted to steal from customers, investors and lenders and didn’t realize his companies were at least $10 billion in debt until October 2022.
The trial attracted intense interest with its focus on a fraud on a scale not seen since the 2009 prosecution of Bernard Madoff, whose Ponzi scheme over decades cheated thousands of investors out of about $20 billion. Madoff pleaded guilty, was sentenced to 150 years in prison, where he died in 2021.
The prosecution of Bankman-Fried, 31, put a spotlight on the emerging industry of cryptocurrency and a group of young executives in their 20s who lived together in a $30 million luxury apartment in the Bahamas as they dreamed of becoming the most powerful player in a new financial field.
U.S. Attorney Damian Williams said they engaged in one of the biggest frauds in U.S. history.
Prosecutors made sure jurors knew that the defendant they saw in court with short hair and a suit was not the man with big messy hair and shorts that became his trademark appearance after he started his cryptocurrency hedge fund, Alameda Research, in 2017 and FTX, his cryptocurrency exchange, two years later.
They showed the jury pictures of Bankman-Fried sleeping on a private jet, sitting with a deck of cards and mingling at the Super Bowl with celebrities including the singer Katy Perry. Assistant U.S. Attorney Nicolas Roos called Bankman-Fried someone who liked “celebrity chasing.”
In a closing argument, defense lawyer Mark Cohen said prosecutors were trying to turn “Sam into some sort of villain, some sort of monster.”
“It’s both wrong and unfair, and I hope and believe that you have seen that it’s simply not true,” he said. “According to the government, everything Sam ever touched and said was fraudulent.”
The government relied heavily on the testimony of three former members of Bankman-Fried’s inner circle, his top executives including his former girlfriend, Caroline Ellison, to explain how Bankman-Fried used Alameda Research to siphon billions of dollars from customer accounts at FTX.
With that money, prosecutors said, the Massachusetts Institute of Technology graduate gained influence and power through investments, contributions, tens of millions of dollars in political contributions, Congressional testimony and a publicity campaign that enlisted celebrities like comedian Larry David and football quarterback Tom Brady.
Ellison, 28, testified that Bankman-Fried directed her while she was chief executive of Alameda Research to commit fraud as he pursued ambitions to lead huge companies, spend money influentially and run for U.S. president someday. She said he thought he had a 5 percent chance to be U.S. president someday.
Becoming tearful as she described the collapse of the cryptocurrency empire last November, Ellison said the revelations that caused customers collectively to demand their money back, exposing the fraud, brought a “relief that I didn’t have to lie anymore.”
FTX cofounder Gary Wang, who was FTX’s chief technology officer, revealed in his testimony that Bankman-Fried directed him to insert code into FTX’s operations so that Alameda Research could make unlimited withdrawals from FTX and have a credit line up to $65 billion. Wang said the money came from customers.
Nishad Singh, the former head of engineering at FTX, testified that he felt “blindsided and horrified” at the result of the actions of a man he once admired when he saw the extent of the fraud as the collapse last November left him suicidal.
Ellison, Wang and Singh all pleaded guilty to fraud charges and testified against Bankman-Fried in the hopes of leniency at sentencing.
Bankman-Fried was arrested in the Bahamas last December and extradited to the United States, where he was freed on a $250 million personal recognizance bond with electronic monitoring and a requirement that he remain at the home of his parents in Palo Alto, California.
His communications, including hundreds of phone calls with journalists and internet influencers, along with emails and texts, eventually got him in trouble when the judge concluded he was trying to influence prospective trial witnesses and ordered him jailed in August.
During the trial, prosecutors used Bankman-Fried’s public statements, online announcements and his Congressional testimony against him, showing how the entrepreneur repeatedly promised customers that their deposits were safe and secure as late as last Nov. 7 when he tweeted “FTX is fine. Assets are fine” as customers furiously tried to withdraw their money. He deleted the tweet the next day. FTX filed for bankruptcy four days later.
In his closing, Roos mocked Bankman-Fried’s testimony, saying that under questioning from his lawyer, the defendant’s words were “smooth, like it had been rehearsed a bunch of times?”
But under cross examination, “he was a different person,” the prosecutor said. “Suddenly on cross-examination he couldn’t remember a single detail about his company or what he said publicly. It was uncomfortable to hear. He never said he couldn’t recall during his direct examination, but it happened over 140 times during his cross-examination.”


More from News 12
1:50
Sachem schools consider staffing and program cuts, piercing tax cap as budget vote looms

Sachem schools consider staffing and program cuts, piercing tax cap as budget vote looms

2:25
Sunny and mild Tuesday before rain returns Wednesday

Sunny and mild Tuesday before rain returns Wednesday

0:17
Flames rip through North Amityville home

Flames rip through North Amityville home

0:51
NCC working with food truck vendors to provide food for rest of semester

NCC working with food truck vendors to provide food for rest of semester

0:26
USDA warns of ground beef that may be contaminated with E.coli

USDA warns of ground beef that may be contaminated with E.coli

Is your mom awesome? Long Island tell us why your Mom Rocks!

Is your mom awesome? Long Island tell us why your Mom Rocks!

1:42
Made on Long Island: Nicolock Paving Stones in Lindenhurst

Made on Long Island: Nicolock Paving Stones in Lindenhurst

0:48
9 steps to take if your ‘fur-ever’ friend goes missing

9 steps to take if your ‘fur-ever’ friend goes missing

0:51
State police: Trooper struck in the face by combative driver during Southern State Parkway traffic stop

State police: Trooper struck in the face by combative driver during Southern State Parkway traffic stop

1:54
Ronkonkoma woman pleads not guilty to 49 counts of animal cruelty

Ronkonkoma woman pleads not guilty to 49 counts of animal cruelty

1:33
Hampton Bays woman retrieves phone, wallet she accidently dumped into recycling bin nearly 3 weeks ago

Hampton Bays woman retrieves phone, wallet she accidently dumped into recycling bin nearly 3 weeks ago

1:55
Long Islanders taught about dangers of toxic pollutants in drinking water

Long Islanders taught about dangers of toxic pollutants in drinking water

0:16
Police: Long Beach man punched nurse in abdomen at Mount Sinai South Nassau Hospital

Police: Long Beach man punched nurse in abdomen at Mount Sinai South Nassau Hospital

1:59
Long Island gets introduced to matzah pizza; proceeds will go toward charities

Long Island gets introduced to matzah pizza; proceeds will go toward charities

0:32
Spartans chosen as new mascot for Brentwood school district

Spartans chosen as new mascot for Brentwood school district

0:19
Police: 2 people hospitalized following Lawrence crash

Police: 2 people hospitalized following Lawrence crash

2:12
Amityville schools to receive $2 million from new state budget to help reduce budget deficit, save jobs

Amityville schools to receive $2 million from new state budget to help reduce budget deficit, save jobs

0:17
Man wanted for stealing $1,000 in merchandise from Centereach store

Man wanted for stealing $1,000 in merchandise from Centereach store

1:30
Paws & Pals: Dogs up for adoption at Brookhaven Animal Shelter on April 22

Paws & Pals: Dogs up for adoption at Brookhaven Animal Shelter on April 22

0:48
Nonprofit environmental group hosts discussion on climate change at Jones Beach event

Nonprofit environmental group hosts discussion on climate change at Jones Beach event