Former FTX Chief Executive Sam Bankman-Fried is currently facing fraud charges over the collapse of the bankrupt cryptocurrency exchange. The jury in his fraud trial began deliberations on Thursday after a monthlong trial in which prosecutors accused Bankman-Fried of stealing billions of dollars of customer funds.
Bankman-Fried, the founder of FTX cryptocurrency exchange, is awaiting his fate in the Manhattan federal court almost a year after FTX declared bankruptcy. The collapse of the exchange shocked cryptocurrency markets and wiped out Bankman-Fried’s estimated $26 billion fortune, as reported by Forbes.
The former CEO has pleaded not guilty to two counts of fraud and five counts of conspiracy. The 12 jurors must agree unanimously on the various charges to reach a verdict of guilty or not guilty. The deliberations could extend into next week, and the jury is not scheduled to deliberate on Friday.
Prosecutors alleged that Bankman-Fried orchestrated one of the largest financial frauds in U.S. history, with a total of $8 billion stolen. They claimed that he looted customer funds to support his crypto-focused Alameda Research hedge fund, make speculative venture investments, and donate over $100 million to U.S. political campaigns to promote cryptocurrency legislation favorable to his business.
Furthermore, prosecutors argued that Bankman-Fried instructed other executives to manipulate FTX’s computer code to allow Alameda to drain funds. The hedge fund would then lend the money to Bankman-Fried and other executives for personal expenses. Prosecutors also accused Bankman-Fried of directing the falsification of financial statements.
Prosecutor Danielle Sassoon countered the defense’s closing argument by stating that Bankman-Fried “lied to gain customers’ trust, to get their money, and then he decided the rules didn’t apply to him and his business.”
During his testimony, Bankman-Fried acknowledged mistakes made while running FTX that harmed customers, such as not hiring a chief risk officer. However, he maintained that he never intended to commit fraud.
Bankman-Fried’s defense lawyer, Mark Cohen, argued that “business decisions made in good faith are not grounds to convict” and that poor risk management or bad business judgments are not criminal offenses.
Sassoon criticized this argument, comparing it to someone robbing a jewelry store without a security guard. She emphasized that Bankman-Fried knew his actions were wrong, as evidenced by his failure to hire a risk officer.
Bankman-Fried faces the possibility of decades in prison if convicted, with his sentence determined at a later date by U.S. District Judge Lewis Kaplan based on several factors.
The trial has gained significant attention, with Damian Williams, the top federal prosecutor in Manhattan, and supporters of cracking down on financial crime present in the courtroom.
The outcome of this trial will be closely watched by both the cryptocurrency industry and the wider financial community as it could potentially set a precedent for future cases involving fraud allegations within the digital asset space.