FTX Founder Sam Bankman-Fried Found Guilty of all Charges: A Detailed Look at the Verdict

2023-11-15, 04:53

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## TL; DR

A New York jury convicted Sam Bankman-Fried of 7 counts [related to the FTX collapse](https://www.gate.io/explore/ftx-sbf "related to the FTX collapse").

Gary Wang, Nishad Singh and Caroline Ellison pleaded guilty to charges levelled against them pertaining to FTX implosion.

The Federal Court will determine Bankman-Fried’s sentence in March 2024.

## Introduction

The trial of Sam Bankman-fried is coming to an end after a federal court found that he is guilty of all the 7 charges leveled against him. However, the judge has not yet passed the sentence which is likely to come in March 2024. There is a high probability that Sam Bankman-Fried may spend decades in prison.

This article will discuss the charges which the court found Bankman-Fried guilty of. It will also focus on the possible consequences of the verdict on his part and the FTX crypto exchange.

## Bankman-Fried Convicted of All Charges

A federal court has found Sam Bankman-Fried, the FTX and Alameda Research founder, guilty of defrauding investors, lenders and other customers of billions of dollars in a case that has been labelled the biggest financial fraud in the history of the United States of America.

The New York jury believes that Bankman-Fried cheated the FTX Crypto exchange customers of more than $10 billion dollars. All along, however, Bankman-Fried has denied that he defrauded the FTX investors.

In short, Bankman-Fried was convicted of wire-fraud on customers and lenders as well as 5 conspiracy charges related to securities, commodities and money-laundering.

**Wire fraud/conspiracy to commit wire fraud against FTX customers: **The biggest issue against Bankman-Fried was the loss of customer funds. Bankman-Fried defrauded the customers by allowing Alameda Research to tap in FTX funds.

In most cases, the customers deposited the funds they wanted to trade in Alameda Research bank accounts. As a result, Alameda Research used the funds as it deemed necessary.

**Wire fraud/conspiracy to commit wire fraud against Alameda's lenders:** The main issue here is that Alameda Research doctored the balance sheet it sent to companies like Genesis and [BlockFi](https://www.gate.io/blog_detail/1241/v2lsbcbcbg9ja0zpiejlifrozsbozxh0ifrviezhbgw "BlockFi") it wanted to borrow funds from.

In simple terms, the company intentionally misrepresented its financial reports forwarded to key partners. The court held Bankman-Fried responsible because he approved the reports.

**Conspiracy to commit securities fraud against FTX's investors:** The FTX Crypto exchange lied to its partners how it uses its funds. The executive also gave wrong figures about the revenue the exchange was generating from its operational activities.

More importantly, Alameda Research did not divulge the losses it was making. All these resulted in its business partners making wrong investment decisions. Companies like Paradigm and Third Point made investment decisions which were based on misrepresented information.

**Conspiracy to commit commodities fraud against FTX customers:** This was a conspiracy to steal cryptocurrencies like <a href="/id/price/bitcoin-btc" target="_blank" class="blog_inner_link">Bitcoin</a> and ETH which the SEC regulation classifies as commodities. This allegation is similar to the first one: Wire fraud/conspiracy [to commit wire fraud against FTX customers](https://www.gate.io/blog_detail/3017/ftx-sues-sam-bankman-fried-and-former-_s-for-1-billion "to commit wire fraud against FTX customers"). However, the first charge relates to investor funds while this one deals with cryptocurrencies that fall under US commodities.

**Conspiracy to commit money laundering:** The SEC charges Bankman-Fried of moving customer funds from FTX exchange [to Alameda Research](https://www.gate.io/blog_detail/1748/disclosure-about-alameda-and-ftx-how-can-users-avoid-risks-when-organizations-are-in-chaos "to Alameda Research") where it was used for unrelated purposes like making political donations. Primarily, Bankman-Fried failed to clear himself of these charges leading to his conviction.

## Background to the FTX Crypto Exchange Saga

Previously, we discussed the **7 charges against SBF**. Let’s briefly understand how the saga unfolded in 2022. Several events led to FTX collapse and the subsequent SEC lawsuit.

Nearly 1 year ago Ian Allison, a reporter at [CoinDesk published a claim](https://www.coindesk.com/business/2022/11/02/divisions-in-sam-bankman-frieds-crypto-empire-blur-on-his-trading-titan-alamedas-balance-sheet/ "CoinDesk published a claim") that Alameda Research held large amounts of FTT, FTX’s native token. After that revelation, Changpeng Zhao, Binance CEO, declared that he would pull out of FTX. These two events led to a Run on FTX which forced the exchange, Alameda Research and its other subsidiaries to [declare bankruptcy](https://www.gate.io/blog_detail/3284 "declare bankruptcy").

The other former FTX executives including Gary Wang, Chief Technology Officer, Nishad Singh, the former Head of Engineering and Caroline Ellison, the former Alameda Research CEO, pleaded guilty to these charges.

Later, most of them became witnesses against Bankman-Fried. After the FTX collapse, Bankman-Fried resigned as CEO. Later, he was arrested in the Bahamas and extradited to the United States to stand trial for his misdeeds.

In August U.S. District Judge Lewis Kaplan revoked Bankman-Fried’s bail, accusing him of trying to influence the Federal key witnesses such as Ellison, his ex-girl-friend. Since then he has been in Jail in Metropolitan Detention Center in Brooklyn,.

It is important to note that Bankman-Fried will still stand trial for other 5 charges in March 2024. The charges include running an unlicensed money transmitter business, bank fraud and the violation of the bribery statute of the Foreign Corrupt Practices Act.

## Consequences of Bankman-Fried’s Verdict

Each of the charges Bankman-Fried was convicted of carry a sentence of between 5 and 20 years. This means that he may spend up to 115 years in prison, unless he serves some of the sentences concurrently. However, Bankman-Fried has to wait until March 2024 to hear his sentence.

The procedure is that the prosecutors will recommend the sentence by 15 March 2024. Nonetheless, U.S. district court Judge Lewis Kaplan will have a final say on that. It is also important to note that Bankman-Fried has the right to appeal against both the conviction and the sentence.

Teddy Schleifer, a member of Bankman-Fried’s defense team hinted on his willingness to appeal against the convection. Posting on X [Schleifer said](https://twitter.com/teddyschleifer/status/1720233526048510333 "Schleifer said"), “We 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."

Before he gets his sentence, Bankman-Fried will remain in Metropolitan Detention Center in Brooklyn, where he was placed in August.

## The Consequence of Bankman-Fried Conviction on FTX

Legally, FTX may continue its operations under a new leadership. [An X account, FTX 2.0 Coalition, has hinted](https://twitter.com/AFTXcreditor/status/1662816040231862275 "An X account, FTX 2.0 Coalition, has hinted") that there are several bidders for FTX. He/she posted, “Multiple prospective FTX 2.0 bidders inquired with us. We believe incentivising customer-creditors through upside sharply increases both success rate and potential. Once all options are on the table, we will support whichever bid is most conducive to optimal creditor recovery.”

The Verdict on Bankman-Fried is unlikely to affect the performance of FTX if a reputable business or individual acquires it. CNBC quoted Gary Gensler, the SEC chair, as saying that anyone can acquire and revive FTX crypto exchange.

[According to CNBC](https://www.cnbc.com/2023/11/08/secs-gensler-says-rebooted-ftx-is-possible-if-done-within-the-law.html "According to CNBC"), Gensler said, “If Tom or anybody else wanted to be in this field, I would say, ‘Do it within the law. Build the trust of investors in what you’re doing and ensure that you’re doing the proper disclosures — and also that you’re not commingling all these functions, trading against your customers. Or using their crypto assets for your own purposes.”

## Conclusion

The FTX founder, Sam Bankman-Fried was convicted of 7 counts arising from the collapse of the exchange. Similarly, the other FTX executives including Gary Wang, Nishad Singh and Caroline Ellison, pleaded guilty to the same charges. The judge will pass Bankman-Fried’s sentence on 28 March 2024. In the meantime SBF will stay in the Metropolitan Detention Center in Brooklyn.

<div class="blog-details-info">
<div>Author:** Mashell C.**, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

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