By LARRY NEUMEISTER (Associated Press)
NEW YORK (AP) — FTX founder Sam Bankman-Fried’s spectacular rise and fall within the cryptocurrency trade — a journey that included his testimony earlier than Congress, a Super Bowl commercial and goals of a future run for president — hit a brand new backside Thursday when a New York jury convicted him of fraud in a scheme that cheated clients and buyers of at the least $10 billion.
After the monthlong trial, jurors rejected Bankman-Fried’s declare throughout 4 days on the witness stand in Manhattan federal court docket that he by no means dedicated fraud or meant to cheat clients earlier than FTX, as soon as the world’s second-largest crypto trade, collapsed out of business a 12 months in the past.
“His crimes caught up to him. His crimes have been exposed,” Assistant U.S. Attorney Danielle Sassoon advised the jury of the onetime billionaire simply earlier than they had been learn the legislation by Judge Lewis A. Kaplan and started deliberations. Sassoon mentioned Bankman-Fried turned his clients’ accounts into his “personal piggy bank” as as much as $14 billion disappeared.
She urged jurors to reject Bankman-Fried’s insistence when he testified over three days that he by no means dedicated fraud or plotted to steal from clients, buyers and lenders and didn’t understand his corporations had been at the least $10 billion in debt till October 2022.
Bankman-Fried was required to face and face the jury as responsible verdicts on all seven counts had been learn. He saved his palms clasped tightly in entrance of him. When he sat down after the studying, he saved his head tilted down for a number of minutes.
After the choose set a sentencing date of March 28, Bankman-Fried’s mother and father moved to the entrance row behind him. His father put his arm round his spouse. As Bankman-Fried was led out of the courtroom, he seemed again and nodded towards his mom, who nodded again after which turned emotional, wiping her hand throughout her face after he left the room.
Former federal prosecutors mentioned the fast verdict — after solely half a day of deliberation — exhibits how properly the federal government tried the case.
“The government tried the case as we expected. It was a massive fraud, but that doesn’t mean it had to be a complicated fraud, and I think the jury understood that argument,” Joshua A. Naftalis, a associate at Pallas Partners LLP and a former Manhattan prosecutor.
Bankman-Fried’s lawyer, Mark Cohen, mentioned in a press release they “respect the jury’s decision. But we are very disappointed with the result.”
“Mr. Bankman Fried maintains his innocence and will continue to vigorously fight the charges against him,” Cohen mentioned.
The trial attracted intense curiosity with its give attention to a fraud on a scale not seen because the 2009 prosecution of Bernard Madoff, whose Ponzi scheme over a long time cheated hundreds of buyers out of about $20 billion. Madoff pleaded responsible, was sentenced to 150 years in jail, the place he died in 2021.
The prosecution of Bankman-Fried, 31, put a highlight on the rising trade of cryptocurrency and a gaggle of younger executives of their 20s who lived collectively in a $30 million luxurious house within the Bahamas as they dreamed of changing into probably the most highly effective participant in a brand new monetary discipline.
U.S. Attorney Damian Williams mentioned they engaged in one of many largest frauds in U.S. historical past.
Prosecutors made positive jurors knew that the defendant they noticed in court docket with quick hair and a swimsuit was not the person with huge messy hair and shorts that turned his trademark look after he began his cryptocurrency hedge fund, Alameda Research, in 2017 and FTX, his cryptocurrency trade, two years later.
They confirmed the jury footage of Bankman-Fried sleeping on a personal jet, sitting with a deck of playing cards and mingling on the Super Bowl with celebrities together with the singer Katy Perry. Assistant U.S. Attorney Nicolas Roos referred to as Bankman-Fried somebody who appreciated “celebrity chasing.”
In a closing argument, protection lawyer Mark Cohen mentioned prosecutors had been attempting to show “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 mentioned. “According to the government, everything Sam ever touched and said was fraudulent.”
The authorities relied closely on the testimony of three former members of Bankman-Fried’s inside circle, his high executives together with his former girlfriend, Caroline Ellison, to clarify how Bankman-Fried used Alameda Research to siphon billions of {dollars} from buyer accounts at FTX.
With that cash, prosecutors mentioned, the Massachusetts Institute of Technology graduate gained affect and energy via investments, contributions, tens of hundreds of thousands of {dollars} in political contributions, Congressional testimony and a publicity marketing campaign that enlisted celebrities like comic Larry David and soccer quarterback Tom Brady.
Ellison, 28, testified that Bankman-Fried directed her whereas she was chief government of Alameda Research to commit fraud as he pursued ambitions to guide big corporations, spend cash influentially and run for U.S. president sometime. She mentioned he thought he had a 5 % likelihood to be U.S. president sometime.
Becoming tearful as she described the collapse of the cryptocurrency empire final November, Ellison mentioned the revelations that triggered clients collectively to demand their a refund, exposing the fraud, introduced a “relief that I didn’t have to lie anymore.”
FTX cofounder Gary Wang, who was FTX’s chief know-how officer, revealed in his testimony that Bankman-Fried directed him to insert code into FTX’s operations in order that Alameda Research may make limitless withdrawals from FTX and have a credit score line as much as $65 billion. Wang mentioned the cash got here from clients.
Nishad Singh, the previous head of engineering at FTX, testified that he felt “blindsided and horrified” at the results of the actions of a person he as soon as admired when he noticed the extent of the fraud because the collapse final November left him suicidal.
Ellison, Wang and Singh all pleaded responsible to fraud prices and testified in opposition to Bankman-Fried within the hopes of leniency at sentencing.
Bankman-Fried was arrested within the Bahamas final December and extradited to the United States, the place he was freed on a $250 million private recognizance bond with digital monitoring and a requirement that he stay on the dwelling of his mother and father in Palo Alto, California.
His communications, together with a whole lot of cellphone calls with journalists and web influencers, together with emails and texts, ultimately bought him in bother when the choose concluded he was attempting to affect potential trial witnesses and ordered him jailed in August.
During the trial, prosecutors used Bankman-Fried’s public statements, on-line bulletins and his Congressional testimony in opposition to him, exhibiting how the entrepreneur repeatedly promised clients that their deposits had been secure and safe as late as final Nov. 7 when he tweeted “FTX is fine. Assets are fine” as clients furiously tried to withdraw their cash. He deleted the tweet the subsequent day. FTX filed for chapter 4 days later.
In his closing, Roos mocked Bankman-Fried’s testimony, saying that beneath questioning from his lawyer, the defendant’s phrases had been “smooth, like it had been rehearsed a bunch of times?”
But beneath cross examination, “he was a different person,” the prosecutor mentioned. “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.”
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Associated Press reporter Ken Sweet contributed from Palm Springs, California.
Source: www.bostonherald.com”