Sam Bankman-Fried, the founder of failed cryptocurrency exchange FTX, has been found guilty of seven counts, including wire fraud, conspiracy to commit wire fraud, and conspiracy to commit money laundering.
Bankman-Fried founded FTX because he was frustrated with other exchanges used by his crypto trading firm Alameda Research, according to a profile from FTX investors Sequoia Capital. But FTX was a fraud “from the start,” the Securities and Exchange Commission wrote, as Bankman-Fried and other executives misused customer funds to make billions of dollars of investments, buy $200 million of real estate, and repay Alameda’s lenders while representing the business as a safe place to invest.
On March 28th, he returned to the courtroom for sentencing, where Judge Lewis Kaplan sentenced Bankman-Fried to 25 years in prison.
The scheme started to fall apart rapidly after CoinDesk published a blockbuster article about Alameda’s balance sheet. It showed that FTX and Alameda were very closely linked and that a lot of the balance sheet consisted of the FTT token, which was issued by FTX. That article led to Binance CEO Changpeng “CZ” Zhao — a former investor in FTX — saying he would sell his holdings of FTT. FTX’s bankruptcy and Bankman-Fried’s resignation from the company followed.
One year to the day after CoinDesk reported on the balance sheet, a New York jury returned a guilty verdict against Bankman-Fried on all of the charges he faced.
You can follow along below for all of the updates from the trial and sentencing.
- Former FTX US exec Brett Harrison raises $35 million for a “perpetual futures” exchange.
I don’t know what “AX, the financial industry’s first centralized exchange for perpetual futures on traditional asset classes,” is, but I do recognize Harrison.
He was once touting FTX Stocks, and later mentioned by the FDIC for statements about the insurance status of customers’ accounts that it considered “false and misleading,” before everything went boom.
SBF to get the Girls treatment in Going Infinite film adaptation
Image: The VergeApple and A24 are working on a new movie about imprisoned crypto tycoon Sam Bankman-Fried based on The Big Short writer Michael Lewis’s book Going Infinite: The Rise and Fall of a New Tycoon. Variety reported their arrangement and that Girls creator and star Lena Dunham is set to write the film.
Going Infinite is Lewis’s chronicle of the rise, spectacular implosion, and eventual conviction of Bankman-Fried and his crypto exchange FTX.
Read Article >- FTX co-conspirator Nishad Singh isn’t going to prison.
Singh, now the fourth FTX executive to be sentenced after Sam Bankman-Fried, Caroline Ellison, and Ryan Salame, will receive three years of supervised release.
Judge Lewis A. Kaplan, who has presided over the cases, said that Mr. Singh provided crucial assistance to the government and that he had played a “much more limited” role in the scheme than his colleagues had.
Nishad Singh, a Top FTX Executive, Is Given No Prison Time After Cooperation[The New York Times]
Why did Caroline Ellison do it?
Photo Illustration by Cath Virginia / The Verge | Photo by Bloomberg, Agustina Torres, Getty ImagesThe story of Sam Bankman-Fried was obvious enough: a Shakespearean level of arrogance that led to tragedy. But I have been puzzled for some time by Caroline Ellison, the former CEO of Alameda Research and star witness of the FTX trial. Now, after her sentencing, I believe what she did is weirder and perhaps sadder.
Ellison spoke on her own behalf, beginning by apologizing to everyone she’s hurt. “I think on some level my brain can’t even truly comprehend the scale of the harms I’ve caused,” she said. “That doesn’t mean I don’t try. So to all the victims and everyone I harmed directly or indirectly, I am so, so sorry.”
Read Article >Caroline Ellison sentenced to two years in jail for role in FTX fraud
The end of the line. Photo Illustration by Cath Virginia / The Verge | Photo by Bloomberg, Getty ImagesCaroline Ellison, the former CEO of Alameda Research, was sentenced to 24 months in prison for her role in the FTX collapse. She must also forfeit $11 billion.
Ellison pleaded guilty to two counts of wire fraud and five conspiracy counts in December 2022 as part of a cooperation agreement with the government. Prosecutors had recommended a lenient sentence because of Ellison’s “extraordinary” and “very timely” cooperation. Her own lawyers asked for no jail time, as did the federal Probation Department.
Read Article >- The king of wishful thinking files an appeal on his fraud conviction.
Sam Bankman-Fried’s lawyers argue that Judge Lewis Kaplan unfairly limited the evidence that was allowed in court, including that Bankman-Fried had relied on lawyers in making his decisions. Also stealing all that money wasn’t really that bad because his victims were eventually repaid.
Sam Bankman-Fried Files Appeal to Overturn Fraud Conviction[The New York Times]
- Former FTX exec’s domestic partner indicted on campaign finance charges.
Ryan Salame is due to begin his seven-year prison sentence next month, but now he claims prosecutors reneged on an agreement to drop a campaign finance investigation into his partner, Michelle Bond, in exchange for his guilty plea.
Charges filed today in the SDNY accuse the two of faking a $400k consulting payment from FTX to fund her unsuccessful run for Congress in 2022.
Screenshot: US v. Michelle Bond indictment (PDF) - Area writer lost in the trees; can’t see forest.
Michael Lewis has a new essay to accompany the paperback version of Going Infinite, a book about Sam Bankman-Fried that appeared just before his trial. Sure, SBF did crimes because he was an arrogant gambler, but Lewis still loves his gamer son.
Opinion | Sam Bankman-Fried, a personal verdict[Washington Post]
- Judge throws the book at Sam Bankman-Fried’s FTX associate.
Ryan Salame, a top lieutenant at FTX, got over seven years in prison. He’s the second FTX official sentenced, after SBF himself, and did not cooperate with the government — unlike several other members of the inner circle.
Sam Bankman-Fried is still gambling
“I’ve never seen a performance quite like that.” Collage by Cath Virginia / The Verge | Photo by Victor J. Blue, Bloomberg, Getty ImagesSam Bankman-Fried has learned nothing, and I’m not sure any of the rest of us have, either.
At his sentencing, I sat several rows behind Bankman-Fried, clad in prison khaki and clanking faintly when he walked from the shackles on his feet, while he gave his statement to the court. “I’m sorry about what happened at every stage,” Bankman-Fried said. “I failed everyone I cared about.”
Read Article >Sam Bankman-Fried sentenced to 25 years for FTX fraud
FTX founder Sam Bankman-Fried once bragged that he had a 5 percent chance of becoming president of the United States Collage by Cath Virginia / The Verge | Photo by Victor J. Blue, Bloomberg, Getty ImagesFTX co-founder Sam Bankman-Fried was sentenced to a total of 300 months, or 25 years, in prison for seven counts of conspiracy and fraud charges stemming from the collapse of the crypto exchange he started. The judge applied a 240-month sentence for four of the charges, plus a 60-month sentence for two others, and ordered that Bankman-Fried forfeit more than $11 billion (including property) as recommended by prosecutors.
Judge Lewis Kaplan’s sentence was shorter than the 40 to 50 years requested by prosecutors, which he said was more than necessary, but longer than the six and a half years Bankman-Fried’s lawyers asked for and far less than the maximum sentence of 110 years.
Read Article >- One of Sam Bankman-Fried’s most infamous quotes may have come back to bite him.
As Inner City Press notes, not only did the prosecution bring up Bankman-Fried’s “fuck regulators” DM sent to Vox reporter Kelsey Piper during the trial, the judge hasn’t forgotten either and mentioned it as evidence that SBF was only acting like he wanted regulation for the crypto industry.
Image: Vox.com - Now SBF is talking.
Paraphrased courtroom updates from Inner City Press on X capture SBF’s reflections on working with Gary Wang, Nishad Singh, and Caroline Ellison.
These former friends are now felons who testified against Bankman-Fried during his trial.
- These arguments didn’t work on the jury.
Sam Bankman-Fried is being represented by new lawyers during today’s hearing, but their statements on his behalf sound familiar. The jury heard those and reached a guilty verdict in just a few hours; now, we’ll see how the judge responds.
- Sam Bankman-Fried is about to find out how much prison time he’s facing.
The FTX founder is in court now, waiting to see whether Judge Kaplan hands the 40 to 50 years in prison prosecutors recommend — or if his decision is closer to the more lenient five- to six-year sentence that Bankman-Fried’s lawyers are pushing for.
- Prosecutors recommend a 40- to 50-year sentence for Sam Bankman-Fried.
The former crypto billionaire was found guilty on all seven charges he faced in November, and the judge is scheduled to deliver a sentence on March 28th. Bankman-Fried’s lawyers suggested a five- to six-year prison sentence, but a filing submitted by the prosecution on Friday disagrees:
While a Guidelines sentence – which would exceed 100 years, effectively a life sentence – is not necessary, the Government urges the Court to impose a sentence that underscores the remarkably serious nature of the harm to thousands of victims; prevents the defendant from ever again committing fraud; and sends a powerful signal to others who might be tempted to engage in financial misconduct that the consequences will be severe.
A sentence of 40 to 50 years is necessary to serve such purposes.
FTX says it will pay back customers
Illustration: The VergeFTX says it will repay investors after the cryptocurrency exchange’s collapse led to the loss of billions of dollars. During a court hearing on Wednesday, FTX lawyer Andrew Dietderich said the company expects to “have sufficient funds to pay all allowed customer and creditor claims in full.”
The company will recompense customers based on the price of the cryptocurrency they purchased as of November 2022 — when the exchange filed for bankruptcy. There are still some challenges associated with getting the lost funds back to customers, though, as Dietderich notes the company will need to comb through all the claims to determine whether they’re legitimate.
Read Article >- Is Bitcoin Wall Street’s next big thing?
It seems like Bitcoin ETFs may be a new trend for the financiers among us:
The companies getting involved here are, in many cases, household names (and not just for people who have their own pet theories about what happened to Satoshi Nakamoto). Industry giants BlackRock and Fidelity are among those positioned to make the first offerings, which could trade on exchanges like NASDAQ. Expectations around the new ETFs have led to a boom not just of bitcoin’s price but also boosted other digital currencies, including ones that were all but left for dead after their close association with convicted fraudster Sam Bankman-Fried.
Why Wall Street Might Be Falling in Love With Bitcoin[Intelligencer]
- Sam Bankman-Fried won’t face a second trial.
The Wall Street Journal writes that federal prosecutors won’t pursue the five leftover charges that District Court Judge Lewis Kaplan previously split off to avoid delaying the trial that resulted in a guilty verdict for Bankman-Fried last month.
The prosecutors justified the decision in a letter to Kaplan yesterday:
... Much of the evidence that would be offered in a second trial was already offered in the first trial and can be considered by the Court at the defendant’s March 2024 sentencing. Given ... the strong public interest in a prompt resolution of this matter, the Government intends to proceed to sentencing on the counts for which the defendant was convicted at trial.
- An update on the FTX bankruptcy plan, via an interview with an FTX creditor.
Tiffany Fong, who’s been heavily involved with the FTX storyline, interviewed FTX creditor Louis D’Origny about the FTX bankruptcy plan. If you want to look at the Chapter 11 plan for yourself, it’s here.
- The guy who designed Sam Bankman-Fried’s defense says that SBF was “at the very top of the list as the worst person I’ve ever seen do a cross examination.”
David Mills, the Stanford Law prof who also defended ‘80s bond villain Michael Milken, flew to the Bahamas in his own jet when Bankman-Fried was first jailed. His friendship with Bankman-Fried’s parents may not survive the case.
- Forbes publishes 30 Under 30 “Hall of Shame.”
Several dubious characters have made it onto Forbes’ lists in the 13 years it’s been putting them out. Here are ten it regrets:
• Sam Bankman-Fried, CEO of FTX
• Caroline Ellison, Co-CEO of Alameda Research
• Charlie Javice, Founder of Frank
• Nate Paul, Founder of World Class Capital Group
• Martin Shkreli, Founder of MSMB Capital
• Cody Wilson, Founder of Defense Distributed
• James O’Keefe, Founder of Project Veritas
• Phadria Prendergast, Editor-in-Chief of Women Of the City Magazine
• Steph Korey, Co-founder of Away
• Lucas Duplan, Founder of Clinkle
- What could possibly go wrong, again?
Following a jury’s conviction of former FTX boss Sam Bankman-Fried on fraud charges, the Wall Street Journal reports that several former FTX employees, including former general counsel Can Sun, are involved in launching a new cryptocurrency exchange based on Dubai.
Sun and Ferrante said they wanted to use the lessons they learned from FTX’s failure to protect user funds. Backpack Exchange, the name under which Trek Labs will do business, will use Backpack’s technology to allow users to hold funds in their own “self-custody” crypto wallets that the exchange itself wouldn’t be able to unilaterally access, they said.
- “$8 billion is a lot of money.”
With this stage of Sam Bankman-Fried’s big crypto fraud trial over after the jury found the former FTX boss guilty, The Verge reporter Elizabeth Lopatto joined the Crypto Critics’ Corner podcast to discuss everything that went on in the courtroom.
Along with hosts Bennett Tomlin and Cas Piancey, they discuss not only the trial’s final moments but also what’s next for SBF.
