Live Updates: FTX Founder Sam Bankman-Fried Found Guilty of Fraud
Sam Bankman-Fried has been found guilty on all seven charges by a jury in New York.
WELCOME TO OUR live coverage of the verdict in the trial of Sam-Bankman-Fried. The FTX founder has been found guilty on all seven charges and faces up to 115 years in prison.
The guilty verdict will offer some comfort to those whose funds were misappropriated by Bankman-Fried, at least temporarily. But unqualified celebration is premature, says Patrick Hillmann, former chief strategy officer at Binance, because the conditions that enabled his rise to prominence remain unchanged.
Entrepreneurs like Bankman Fried are able to “buy a fast past” into the esteem of “some of the most powerful entities” in the US, says Hillmann. The people who were supposed to be watching for warning signs at FTX were, he says, “at best sleeping at the wheel and at worst empowering its activities.” In all likelihood, he says, “there will be another Sam Bankman-Fried.”
'Party Time'
FTX customers and crypto evangelists breathed a collective sigh of relief yesterday as Sam Bankman-Fried was found guilty by a jury in New York.
The fraud at FTX, which threw the crypto world into a spin last November, has “unfairly tainted” the rest of the industry, argues market analyst Noelle Acheson, formerly of crypto brokerage Genesis. But Bankman-Fried’s conviction will go a long way toward “closing the book” on this unflattering episode, she says.
Among FTX creditors, the mood is celebratory. “I’m delighted,” says Pat Rabbitte, previously a customer of FTX. “The US justice system has worked.” On Telegram, where former FTX customers gather to discuss the progress of the bankruptcy proceeding, others struck a similar tone. “Party time! Throw away the keys,” wrote one Telegram user, Krystal B, after the verdict had been announced. “Now lock him up for at least 30 years,” wrote another, Jia Yi.
It was a dramatic day in court—and a sprawling and complex case was ultimately decided in just a few hours. You can catch up on all the news from today in our full report.
In almost exactly a month, the dire fate of FTX founder Sam Bankman-Fried went from a risky bet to a near certainty, to a conviction on seven counts and a potential sentence of 115 years in prison.
While Bankman-Fried's future is now sealed by a jury of his peers, what comes next for FTX remains uncertain. The same goes for the Bahamas, which banked on the crypto industry—with FTX and its employees' lavish pastimes at the center—to bolster its economy. Today, FTX’s collapse has left a super yacht-sized hole in the island nation and the hopes of its residents, who may, as WIRED’s Joel Khalili reports, find some solace in the guilty verdict handed down by 12 strangers over 1,000 miles away.
The first SBF trial is over, but the post-trial wrangling is just beginning—including legal maneuvers that will determine whether Sam Bankman-Fried will still face additional charges that were severed from the now-concluded case against him. This means that, ahead of the sentencing hearing on March 28, 2024, at 9:30 am ET, the defense and prosecution will each need to submit a bevy of paperwork to the court.
US district judge Lewis Kaplan agreed to the defense's request to submit its post-trial motions by November 20—slightly beyond the typical period of two weeks. US prosecutors must submit their post-trial motions by December 11. Both sides will have until December 18 to file their “reply papers” in response to previous submissions.
The deadlines go dormant during the end-of-year holidays and January. By February 1, 2024, prosecutors must update the court about its intentions regarding five additional charges that were separated from the case that concluded today. That trial is currently set to begin on March 11, assuming it proceeds.
Finally, ahead of the sentencing trial, the defense must submit its related paperwork to the court by February 27, while the prosecution has until March 15.
Sam Bankman-Fried faces up to 115 years in prison. He won't know how many of those he'll be sentenced to serve for more than four months. The US district judge overseeing Bankman-Fried's trial, Lewis Kaplan, says the FTX founder will be sentenced on March 28, 2024. At least for the moment, Bankman-Fried will remain incarcerated at the Metropolitan Detention Center in Brooklyn, New York.
Bankman-Fried stood to hear the jury’s finding that he was guilty on all charges and then sat back down without much visible sign of emotion. His parents, who have staunchly maintained their son’s innocence since he was charged and attended court each day, looked distraught.
When the guilty verdict came, Bankman-Fried’s father, Joseph Bankman, leaned forward holding his hands on the sides of his head. His mother, Barbara Fried, clutched her hands to her face. Before long, they were holding one another.
The court's work done, Bankman-Fried was escorted away. He looked back at his parents, acknowledging them with a small, resigned nod. His mother pounded her hand against her heart once, producing a thump that could be heard around the emptying courtroom as Bankman-Fried was led out.
Bankman-Fried was found guilty on all seven counts against him—and for the seventh charge, conspiracy to commit money laundering, to its fullest extent. That charge came with the requirement that, to reach a guilty verdict, the jury needed to indicate whether Bankman-Fried was specifically guilty of concealment money laundering, wire fraud proceeds money laundering, or both. It chose both.
When the jurors began their deliberations this afternoon, the possibility that they would deliver a verdict tonight seemed remote. The judge’s instructions to the jury spanned some 60 pages and had taken hours to deliver. Then when the jurors sent the message, “We want cars,” indicating that they planned to work late and would need rides home, it was even more unclear whether they were digging into a mountain of work or making progress and angling to wrap tonight.
As more jury notes came in, though, it became increasingly clear that the jurors had momentum and were diligently working through the seven counts against Bankman-Fried. The jurors asked for highlighter pens and Post-It notes—adding a polite “please”—and also requested the testimony of specific witnesses, which hinted that they were deliberating over the fifth and sixth charges. Still, when the news came at 7:33 pm ET that the jury was ready to deliver a verdict, it was surprising. A complicated case had been decided within hours—perhaps indicating the strength of the charges against Bankman-Fried.
As many expected, WIRED's Joel Khalili reports, the defense's attempt to “argue that Bankman-Fried acted as any rational businessperson would” failed to sway a jury facing a mountain of evidence to the contrary. Former US prosecutor Jordan Estes tells WIRED that the US Department of Justice will treat Bankman-Fried's conviction as a “signature victory”—and a warning to other crypto executives who choose to engage in fraudulent behavior. Given the broad sentiment among many in the crypto world that Bankman-Fried's trial was a “galactic embarrassment” and a “distraction," however, that warning may go unheeded.
FTX founder Sam Bankman-Fried has been found guilty on all seven counts of fraud. You can read our full report on the dramatic outcome of the trial here.
Jury Deliberations Have Begun
Judge Kaplan has sent the jury for deliberations. We’ll find out soon if the jury wants to stay until 8pm or if they want to go until the end of business today and reconvene Monday.
Why Monday? One juror has to travel for a family birthday. The defense had proposed using an alternate juror to move ahead Friday, but Kaplan concluded that a three day weekend isn’t that different from a two day weekend.
The main through-line in the defense’s closing statement yesterday was the idea the government had deliberately interpreted various forms of evidence in an inconsistent manner, in whichever way best suited its case in a particular moment.
The prosecution had been “unfair,” for example, in its depiction of Bankman-Fried’s testimony, said Mark Cohen, defense counsel. “If Sam gave a long answer to a question, they said it was too long. Therefore, you shouldn't rely on it. If he gave a short answer to a question, they said it was too short and you shouldn't rely on it,” Cohen told the jury. This “heads, I win; tails, you lose dynamic,” he said, was patently unfair.
Hedging? Who Cares?
In delivering a closing statement to the jury, the prosecution’s aim is to both underline the strength of its own evidence, but also to demonstrate inconsistencies in the arguments of the defense.
Throughout the trial, for example, the defense had worked to insert into the record—whether through cross-examination of cooperating witnesses or its questioning of Bankman-Fried—the idea that Alameda had disregarded Bankman-Fried’s instruction to hedge its various investments. That’s to say, it failed to place down alternative bets that would come good if the price of cryptocurrencies fell, offsetting its overall losses. The implicit suggestion was that, if others had behaved differently, FTX and Alameda would not have found themselves in dire financial straits.
But this is totally irrelevant, the prosecution told the jury yesterday. With respect to fraud charges, the important part is that Alameda’s bets were made using customer money, not whether Bankman-Fried had wanted to mitigate the risk of losses, it said.
“Wanting to hedge these investments, that is not a defense,” said Nicolas Roos, the prosecutor. “The defendant was gambling with customer money. And whether he thought these were sure bets or safe bets or risky bets or almost sure bets, or that he was going to win more money back in the long run, it doesn't matter. When he took the money and he played roulette with it, he was stealing.”
In its closing statement yesterday, the prosecution pointed repeatedly to the contrast between the fluency and demeanor of Bankman-Fried under questioning by his own lawyers and his evasiveness in cross-examination.
“Did you notice how on Friday [during direct examination] his testimony was smooth, like it had been rehearsed a bunch of times?” said Nicolas Roos, the prosecutor, and he “had a perfect memory.” But when questioned by the government, Bankman-Fried “couldn’t remember a single detail about his company or what he said publicly.”
In cross-examination, there were 140 instances in which Bankman-Fried had said he couldn’t recall the answer to a question, said Roos. When Bankman-Fried did respond, meanwhile, he “approached every question like up was down and down was up.”
The prosecution also sought to debunk the idea, peddled by the defense, that Bankman-Fried was largely unaware of the embezzlement of FTX customer funds, or the extent of the financial shortfall it created. To find Bankman-Fried not-guilty of fraud, Roos told the jurors, “you would have to believe that the defendant, who graduated from MIT, who ran two billion-dollar companies and who was testifying in Congress, was actually clueless.”
As the trial gets underway this morning, let’s cast an eye back to the closing arguments presented yesterday by the prosecution and defense.
The first to take the floor, the prosecution underscored the wealth of documentary and testimonial evidence that it claimed proved Bankman-Fried not only knew about the misappropriation of FTX customer funds all along, but understood it to be unlawful. It also tried to discredit Bankman-Fried’s alternative version of events. “He told a story and he lied to you,” said Nicolas Roos, assistant US attorney, addressing the jury. “He lied about big things, he lied about little things.”
In his riposte, defense counsel Mark Cohen pointed to the prosecution’s demonization of Bankman-Fried, who had been painted as a movie villain—one that flew around in private jets and lived a life of luxury in the Bahamas—only for “the effect.”
The government has tried to “make him into someone you’ll dislike,” Cohen told the jury, into “some sort of monster.” In its rendition of the events leading up to the collapse of FTX, meanwhile, the defense maintained that Bankman-Fried had simply had “differences of business judgment” with his deputies, which the government had later tried to “spin into a crime.”
After five weeks of gripping and not-so-gripping testimony, bickering between the prosecution and defense, and wrangling with the judge over points of law, the case will today be handed to the jury for deliberation. But first, we’ll hear a final rebuttal from the government.
The rebuttal is the opportunity for the prosecution to bring out its most ”colorful language,” says Joshua Naftalis, a former prosecutor and partner at law firm Pallas Partners, and most dramatic metaphors. The goal: to leave no room for doubt in the minds of the jurors.
How long will it take the jury to reach a verdict? Well, how long is a piece of string? The length of deliberation varies drastically from case to case, taking anywhere between hours to days.