You can now listen to Antigua News articles!
By: Mick the Ram
A former billionaire who once ran one of the world’s biggest cryptocurrency exchanges has dramatically been found guilty of fraud and money laundering at the conclusion of one of the most-watched trials ever held in New York.
Sam Bankman-Fried, who only just over a year ago owned a $32bn business and had won himself celebrity status, now seems destined to spend the rest of his days locked away. In an astonishing fall from grace, the 31-year-old ex-owner of crypto firm FTX, listened as a jury delivered its verdict.
Sam Bankman-Fried had set up a company in Antigua and Barbuda.
He had been arrested in 2022 after FTX went bankrupt and he was accused of lying to investors and lenders and stealing billions of dollars. In total he was charged on seven separate counts for which he had pleaded not guilty to them all, insisting that he had always acted in good faith and he had simply made mistakes.
Five of the charges carry a maximum prison term of 20 years, with the other two capped at a five-year maximum. In essence, he could be sentenced to 110 years in prison, when he learns his fate on 28 March next year.
Billions of customer funds gone missing
His cryptocurrency exchange FTX was once valued at $32bn (£26bn), but when it went bankrupt in November of last year, a quarter of that value – $8bn – of customer funds was missing.
The prosecution were able to present evidence that Bankman-Fried’s 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.
However, instead of safeguarding those funds which he had publicly pledged to do, the fraudster actually used the money to not only repay Alameda lenders, but also buy property and make investments, leaving many unable to recover their funds.
Jury having none of it
In a demonstration of a cross between arrogance and naivety, Bankman-Fried took to the stand in the trial to give his own defence, but it badly back-fired when he tried to persuade the court that the money transfers undertaken were permissible and did not constitute a crime.
He testified that he was largely unaware of the financial hole that his company was in until just a few weeks before its collapse. It made little impact on the jury who took less than five hours to reappear with their guilty verdict,
Unclear whether appeal to follow
After proceedings Bankman-Fried’s lawyer Mark Cohen made a statement saying: “We respect the jury’s decision, but we are very disappointed with the result.” He added that his client still maintains his innocence and as such, will continue to “vigorously fight the charges against him”.
Mixing with the celebs
Bankman-Fried had become a celebrity, chatting on TV with former US President Bill Clinton and former UK Prime Minister Tony Blair. He convinced A-listers to endorse his crypto exchange and often made the claim that all he ever wanted to do was give the fortune he made away to good causes.
FTX facilitating billions a day
He had grown up in the shadow of Silicon Valley, and at a very early age had demonstrated a remarkable ability in maths. Graduating from the Massachusetts Institute of Technology (MIT) with a physics degree in 2017, he initially co-founded Alameda Research, a crypto hedge fund which he was quoted as saying was at one point making him $1m a day.
Two years later he set up FTX in Hong Kong, with the exchange acting almost as an unregulated bank, allowing people to trade money for crypto coins, such as Bitcoin, and store their funds for safekeeping. At its peak, FTX executives said the platform was facilitating $10bn-$15bn trading every day. FTX even gave its name to an NBA stadium.
Investigation causes panic
Then came the implosion of the empire, when a bombshell investigation into FTX by a news site called his companies into question, raising doubts about their long-term safety for financial investments. This lead to further accusations of wholesale misuse of FTX customer funds.
This brought about major panic with many of those customers frantically withdrawing billions of dollars out of the exchange platform, with the disastrous yet inevitable consequences of the firm going bust. More than a million people failed to get their money out in time and were unable to get a reimbursement.
No second chance
Mr Bankman-Fried was arrested on Monday, 12 December, 2022 when officers of the Bahamas Financial Crimes Investigation Unit arrived at his apartment complex, in Nassau, at the request of the US government, based on a sealed indictment filed by the Southern District of New York (SDNY).
Even then it seemed he failed to grasp the magnitude of his crimes, when in a series of tweets he apologised but followed up saying: “Hopefully things can find a way to recover and it can bring some amount of transparency, trust and governance.”
Right up to his arrest he insisted that he could start a new business to make enough money to pay back victims of the FTX collapse. He is likely to have a very long time to contemplate what that business might have been after his sentencing next year.