Sam Bankman-Fried found guilty of defrauding FTX customers

FTX filed for bankruptcy roughly one year ago.

Published: November 2, 2023 7:58pm

Updated: November 2, 2023 8:48pm

FTX founder Sam Bankman-Fried was found guilty on federal charges stemming from his operation of the now-defunct cryptocurrency firm.

The jury convicted him on two counts of conspiracy and five counts of fraud following a month-long trial in New York, Reuters reported. Prosecutors had claimed that he stole $8 billion from the firm's customers.

The company suffered the equivalent a bank run last November when investors simultaneously lost faith in the firm and attempted to withdraw their stakes, leaving the company unable to fully remunerate them. The firm's sudden and unexpected collapse prompted instant concerns of foul play and led to the pressing of federal fraud charges against the billionaire. At the time, he resided in the Bahamas, but agreed to extradition to the U.S. in December 2022.

He pleaded not guilty in January and remained under house arrest at his parents' California home until August. U.S. District Judge Judge Lewis A. Kaplan revoked his bail that month after prosecutors claimed he attempted to intimidate a witness.

Bankman-Fried's former girlfriend, Caroline Ellison, pleaded guilty to criminal charges last year and agreed to cooperate with prosecutors. Ellison had served as the CEO of FTX's sister company, investment firm Alameda Research.

Following the collapse of the company, Bankman-Fried's successor as CEO, John J. Ray III, would tell Congress that the company had lacked any meaningful internal safeguards.

"The issue here I was speaking to is I've never seen an utter lack of record keeping, absolutely no internal controls whatsoever," he said in December 2022. "It's one of the worst from a documentation standpoint. Even in the most failed companies you have a fair roadmap of what happened. We're dealing with literally, sort of a paperless bankruptcy, in terms of how they created the company."

Ben Whedon is an editor and reporter for Just the News. Follow him on X, formerly Twitter.

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