It’s official – the former king of cryptocurrencies Sam Bankman-Fried is king of nothing now after he was found guilty on all fraud and money laundering charges. He once run of the world’s biggest crypto exchanges including FTX, a company that eventually ended up a front for his money laundering schemes.
He used the money poured by investors to back up suspicious funds. When FTX lost its liquidity, it collapsed a year ago, leaving many investors without billions of dollars. Bankman-Fried disappeared was apprehended by law officials in his luxury Bahamas villa, and then charged on 7 counts of money laundering and fraud for which he was sentenced to jail. His sentencing is currently scheduled for March 28, 2024.
‘A Case of Lying, Stealing, and Cheating’
Those are the exact words US attorney Damian Williams used in a statement after the verdict. Bankman-Fried stood still in front of the jury, with his friends and family in shock behind him. In hindsight, all of it was expected.
The now-defunct FTX was once valued at $32 billion. After some suspicious rumors, its rival Binance announced that it’s selling its FTT holdings – the original token of the FTX exchange. Binance previously received $529 million in FTT as a sale of its equity in FTX the year before. Binance’s CEO, Changpeng Zhao, tweeted his intentions quickly after CoinDesk revealed a report that most of the holdings in Alameda—Bankman-Fried’s trading firm—were in FTT. This was followed by disputes between the FTX and Binance leaders on Twitter, which further pushed the price of FTT and other cryptocurrencies down.
It can be said that Zhao’s claims and actions have certainly raised some eyebrows of FTX investors. When they tried to get their money out, it was clear that FTX had trouble with withdrawals. On November 8, 2022, Changpeng Zhao announced that Binance has reached a non-binding agreement to purchase FTX due to a liquidity crisis. It was clear that something’s up, but just a day later, the deal was rescinded.
Binance backed down after reports of FTX mishandling funds and citing pending investigations. Bankman-Fried was suddenly not a billionaire. Just three days later, FTX, Alameda, and their subsidiaries declared for bankruptcy. Sam Bankman-Fried criticized everything and everyone on Twitter, claiming that the company is solvent and that he’s been pressured in handing over the reins.
Of course, it was all just talk, as the trials revealed the truth.
Second Trial to Follow
Sam Bankman-Fried is facing decades in jail for his actions. The crypto king was siphoning money from FTX to fund his funds and other companies he created, then borrowing money from them to indulge in a luxurious lifestyle. That’s fraud 101, so it’s no wonder the jury found him guilty on 7 such accounts. A second trial on 5 separate cases of bank fraud and bribery will follow in early March 2024.
According to law experts, right now he’s facing 110 years in jail. Of course, no one expects such a ruling, but it will definitely be decades before Bankman-Fried is released. The biggest problem, however, remains. Over $8 billion in funds were missing from FTX, and investors still haven’t received their money back.