Sam Bankman-Fried Found Guilty: Crypto King Finally Faces the Music

Following a highly publicised month-long trial, Sam Bankman-Fried, the former crypto king, has been declared guilty of both money laundering and fraud, the BBC reports.

Mr Bankman-Fried, who once ran one of the world’s biggest cryptocurrency exchanges, was finally convicted after less than five hours of deliberations by the jury.

A Stunning Fall From Grace

The 31-year-old’s recent conviction marks a dramatic downfall from his former status as a billionaire and a prominent figure in the cryptocurrency industry. He now faces the prospect of spending decades behind bars.

Mr. Bankman-Fried’s legal troubles began following the bankruptcy of his company, FTX, which led to his arrest last year.

Following the verdict, US attorney Damian Williams issued a statement asserting: “Sam Bankman-Fried perpetrated one of the biggest financial frauds in American history – a multibillion-dollar scheme designed to make him the king of crypto,”

“This case has always been about lying, cheating and stealing, and we have no patience for it”.

Mr. Bankman-Fried is scheduled to be sentenced on March 28th next year.

The Road to Prosecution

The former crypto king was accused by prosecutors of lying to investors and lenders and stealing billions of dollars from his exchange FTX, helping to precipitate its collapse.

Prosecutors charged him with seven counts of fraud and money laundering after presenting evidence that Mr Bankman-Fried’s crypto trading firm Alameda Research received deposits on behalf of FTX customers from the early days of the exchange when traditional banks were unwilling to let it open an account.

Instead of safeguarding those funds, as Bankman-Fried repeatedly pledged to do in public, he used the money to repay Alameda lenders, buy property and make investments and political donations.

When FTX went bankrupt last November, Alameda owed the firm $8bn (£6.5bn).

Despite pleading not guilty to all the accusations and acknowledging his mistakes, Mr Bankman-Fried maintained that his actions were driven by good faith.

Following the verdict, Bankman-Fried’s attorney, Mark Cohen, expressed respect for the jury’s decision but conveyed their disappointment with the outcome. Cohen emphasised, “Mr. Bankman-Fried continues to assert his innocence and will vigorously contest the charges against him.”

As for whether there are plans to appeal the verdict, a spokesperson for Mr Bankman-Fried did not immediately respond.

Three of his former close associates, including his ex-girlfriend, Caroline Ellison, opted to plead guilty and cooperate as witnesses in the hope of receiving reduced sentences. Their sentencing is scheduled for a later date.

Commenting on the protection, Amy Harvey, partner at Ontier in London and a specialist in fraud and digital asset matters, told TechRound: “There are several interesting points about this trial and verdict. First, this was treated primarily as a fraud case, not a crypto case. The prosecutors focussed on the fact that it was a multi-billion dollar fraud designed to make SBF the “king of crypto” – ultimately he took customer assets and lied about what he was going to do with them.

“It wouldn’t have mattered if the case concerned cash or any other asset class (digital or otherwise), the long-standing laws and usual considerations in relation to fraud (in this case from a US perspective) applied. This is a critical lesson other crypto-providers should heed, regardless of the relative lack of regulation in the sector. No business owner or organisation is above the law.”

“the evidence heard in this trial has highlighted the fundamental importance of risk management for crypto-businesses, in the same way, this is sound and expected business practice for other asset management firms who are custodians of customers’ funds. Crypto-operators should ensure they double down on this and governance procedures if they want to shore up confidence in the sector and protect the health of their business. ”

Ms Harvey also brought attention to the impressive speed with which the trial was dealt with, saying this “shows what can be achieved when the political will is there.”

Behind Bars: The Fate of Sam Bankman-Fried

In terms of the possible duration of Mr Bankman-Fried’s sentence, five of the charges come with a maximum prison term of 20 years, while the remaining two carry a five-year maximum sentence, creating a potential maximum sentence of 110 years.

Though it is unlikely the judge will actually impose this, Mr Bankman-Fried is still expected to face a sentence lasting decades.

It’s a lengthy sentence, but one that many think Mr Bankman-Fried deserves to pay.

“He took the money. He knew it was wrong. He did it anyway because he thought he was smarter and better and that he could figure his way out of it,” Assistant US Attorney Nicolas Roos said in his closing arguments.

In a risky move, Mr Bankman-Fried decided to take the stand in his own defence, hoping to convince jurors that prosecutors had failed to prove he acted with criminal intent.

Moreover, his lawyer Mr Cohen tried to paint a portrait of Mr Bankman-Fried as a nerdy mathematician who was overwhelmed at the rapid growth of his company.

“There was bad judgment,” said Mr Cohen. “That does not constitute a crime.”

Mr Bankman-Fried had tried to defend the money transfers between his firms as “permissible”, testifying that he was largely unaware of the financial hole described by his deputies until a few weeks before the FTX collapse last year.

Nevertheless, Mr Bankman-Fried’s actions and the downfall of FTX left many customers unable to recover their funds, though lawyers working on the bankruptcy case have since said they have recovered the vast majority of the missing money.

The Ripple Effect on Cryptocurrency

Mr Bankman-Fried’s trial garnered significant attention due to its impact on the cryptocurrency industry as a whole, which struggled to rebound from the market turbulence of the previous year.

The fallen-from-grace crypto king has come to symbolise the challenges within the sector, a field that US regulators have frequently criticised for its prevalence of illicit activities.

Before his businesses crumbled, Mr Bankman-Fried was known for his associations with celebrities and his frequent appearances in Washington and the media, where he discussed developments in the industry.

His rapid expansion of FTX and strategic moves during the market downturn last year earned him the nickname “the king of crypto.”

Given the uncertain prospects of Congress passing new cryptocurrency regulations in the near future, former federal prosecutor Renato Mariotti anticipates that US courts will continue to be the battleground for industry-related conflicts.

Mr Mariotti remarked, “I really think having specific crypto regulations in the United States would reduce the sort of crime that occurred in this particular case,”

“Sadly I don’t think we’re going to see regulation in the very short term. But it certainly means that the fight is going to continue in courts and civil cases litigated by the SEC (Securities and Exchange Commission) and CFTC (Commodity Futures Trading Commission),” he finished, referring to US financial regulatory agencies.