FTX creator found guilty of embezzlement of $8.9 billion and fraud

[Lord777]

He faces up to 115 years in prison.

A jury in the United States on November 3, 2023, following a five-week trial, found the creator of the FTX crypto exchange, Sam Bankman-Fried, guilty on all seven charges. He was charged with fraud using electronic means, criminal conspiracy and embezzlement of $8.9 billion from the cash accounts of FTX clients.

The jury returned a verdict in four and a half hours. The court will sentence Bankman-Fried on March 28, 2024. According to lawyers, he can get up to 115 years in prison.

In addition, the jury found Sam Bankman-Friedman guilty of defrauding FTX investors, money laundering and defrauding the creditors of the Alameda Research hedge fund, which kept the money of clients of the crypto exchange in a bank account.

The FTX founder said in court that in 2020 he found out that the money of the crypto exchange's clients was in the Alameda account, but did nothing to protect them. He learned in the fall of 2022 that Alameda owes FTX $8.9 billion, but none of the employees of the crypto exchange lost their jobs, it turned out during the investigation.

FTX customers did not have an insurance fund that would compensate them for their losses in the event of the exchange's bankruptcy. The prosecution alleges that Sam Bankman-Friedman transferred clients money to an Alameda account to pay for loans and maintain the luxurious standard of living of FTX management.

According to an investigation by the Securities and Exchange Commission (SEC), Bankman-Fried has raised more than $1.8 billion from investors in FTX since 2019. Most of this amount (about $1.1 billion) came from about 90 investors from the United States. Bankman-Fried secretly transferred money from FTX clients to his hedge fund, Alameda Research LLC, which was given an almost unlimited "credit limit" from the platform's users funds. Bankman-Fried spent the funds of FTX clients in Alameda on venture capital investments, expensive real estate purchases, and large political donations.

 

[Teacher]

The founder and former CEO of the FTX cryptocurrency exchange Sam Bankman-Fried, who was taken into custody, faces a prison term of up to 115 years, according to preliminary data.

The Reuters news agency, citing sources close to the proceedings, reported that Sam Bankman-Fried faces life in prison on the totality of the charges. Based on the materials of the criminal case, the penalty for financial crimes incriminated to Bankman-Fried will be up to 115 years, and may increase if new evidence of his guilt appears.

Former Assistant U.S. Attorney for the Southern District of New York, Nick Akerman, who prosecuted white-collar criminals, takes a different view. He predicts a possible prison term for Bankman-Fried of 10 to 20 years, depending on the details that will be revealed during the investigation.

For example, according to federal law, a conviction for a single fraud involving electronic means is punishable by up to 20 years in prison. Ackerman calls the public indictment "rather superficial," and it is likely that it will be changed and expanded in the future to include accomplices and new details.

"There are a lot of people involved, and this is just the tip of the iceberg," Ackerman predicts.

Sam Bankman-Fried's lawyer asked the court to release his client on $250,000 bail due to his medical condition. However, the court rejected this request, as it assesses the risk of escape of the defendant as "unacceptably high". The judge ordered Bankman-Fried to be sent to a correctional facility in the Bahamas until the next extradition hearing on February 8, 2023. Bankman-Fried and his lawyers have said they will oppose his extradition to the United States.

 

[Teacher]

U.S. Attorney for the Southern District of New York Damian Williams has asked a court to sentence FTX founder Sam Bankman-Fried (SBF) to between 40 and 50 years in prison.

"With all the benefits from a comfortable childhood, an education at MIT, a prestigious start to a career in finance, and a decent startup idea, SBF was able to continue a productive, productive, and altruistic life. [ ... ] Instead, his life in recent years has been filled with incredible greed and arrogance, ambition and rationalization, risk maintenance and gambling with other people's money, " the report says.

Williams noted that even now, Bankman-Fried is refusing to plead guilty to organizing "probably the largest fraud in the last decade." The former head of FTX knew about the rules, but decided that they did not apply to him, the prosecutor added.

"The scale, duration, nature and sheer number of SBF's crimes, the harm caused, willful disregard for the rule of law, and lack of extenuating circumstances make him exceptionally deserving of a sentence that is severe enough to ensure justice for his crimes and deter others from committing similar crimes," the memo said.

The prosecutor called Bankman-Fried's reluctance to admit guilt and repent "staggering." He also compared the FTX founder's crimes to the financial scam of Bernie Madoff, who was sentenced to 150 years in prison in 2009.

"Like Madoff, the defendant embezzled the victims' funds and invested them in real estate, stocks and other less liquid assets for personal gain. Many assets will be recovered and liquidated for damages, but this is due to the administrators of the bankruptcy procedure. Penalties do not affect the determination of the amount of damages for sentencing," Williams explained.

Recall that in late February, SBF lawyer Mark Mukasi requested a sentence ranging from 63 to 78 months in prison for his client. The lawyer called the proposed life sentence too "grotesque".

The court received 29 letters in support of Bankman-Fried asking for a commutation of his future sentence, including from members of his family and a cellmate.

On November 2, 2023, SBF was found guilty of seven counts of money laundering, fraud and conspiracy. He faces a maximum sentence of 115 years in prison.

Sentencing is scheduled for March 28.

• Source: https://storage.courtlistener.com/r...d.590940/gov.uscourts.nysd.590940.410.0_2.pdf