The case against Sam Bankman-Fried reads like an episode of the popular true crime television show American Greed. The cryptocurrency mogul was convicted on multiple counts of wire fraud and defrauding customers on November 2, following a 15-day trial. Jurors returned guilty verdicts on all seven counts that prosecutors sought, and he now faces the possibility of up to 110 years behind bars.
Bankman-Fried used customer money to purchase high-end real estate and used funds for political contributions and charitable donations. In court, Bankman-Fried maintained his innocence, claiming that he believed the money he spent was coming from a corporate spending account, not customer investments.
BREAKING: Sam Bankman-Fried found guilty on all charges, faces up to 115 years in prison.
Should Democrats have to pay back all of SBF's stolen donations? pic.twitter.com/P5dVlS4E0W
— TaraBull (@TaraBull808) November 3, 2023
His company, FTX Trading Ltd., was once the third-largest crypto exchange in the world and boasted over one million users. The company went bankrupt in 2022 as allegations of fraud began to emerge.
The scheme began to unravel when one of FTX Trading’s largest investors, Binance, decided to sell off a majority of its tokens. A landslide was triggered amidst rumors of illegal activity within FTX, which was quickly unable to meet investor demands for payment. It is estimated that FTX Trading owed $8 billion when the company filed for bankruptcy.
In late 2022, the U.S. Attorney for the Southern District of New York announced charges of wire fraud and conspiracy against Bankman-Fried who was living in the Bahamas at the time. He was arrested and extradited to New York, where he was released on a $250 million bond and ordered to remain under house arrest at his parent’s home in Palo Alto, Calif.
Co-founder of FTX Trading, Zixiao “Gary” Wang, plead guilty to federal charges in December 2022 and is now cooperating with authorities against his former business partner Bankman-Fried. Wang faces up to 50 years in prison for wire fraud and three counts of conspiracy.
Even after FTX had filed for bankruptcy protection, Bankman-Fried continued to use the company to finance his exclusive lifestyle. He has been accused by several states and the Federal government of unauthorized trading.
Following the bankruptcy, John Ray, III, was installed as CEO of FTX with the mission of liquidating assets to pay investors. Ray had previously handled similar situations with Enron, Residential Capital, and Nortel. He told U.S. House of Representatives members during a hearing that in his experience, he had never seen a company with poorer controls over finances. He noted that the company used Quickbooks for accounting, a software package that is designed for small businesses, not multi-billion dollar corporations.
Bankman-Fried will face sentencing in March 2024. Former engineering director Nishad Singh and executive Ryan Salame have also pleaded guilty to the charges. Singh is cooperating with authorities, while Salame has refused to do so.