Elan Credit Unions and Community Banks Gain Credit Card Issuing Momentum November 2023 Banner

Everyone Bought FTX’s Story; Now They’re Reacting to Bankman-Fried’s Fall

Sam Bankman-Fried, 31, of Stanford, California, was convicted on all counts Thursday (Nov. 2).

In a bit of poetic justice, the Thursday conviction came exactly one year to the date after a Nov. 2, 2022, expose revealed to the world the giant hole at the empty center of the relationship between his two firms, the FTX cryptocurrency exchange and the crypto trading firm Alameda Research.

It was one of the more high-profile white-collar criminal trials in recent memory, and one of the more satisfying conclusions for many observers — and countless victims.

FTX, Bankman-Fried’s crypto exchange, was a large and influential company in the Web3 domain and venture capital space, as well as within the media sphere.

During the criminal trial, pictures of Bankman-Fried flying on private jets, hobnobbing with global leaders like Tony Blair and Bill Clinton, as well as socializing with celebrities, were paraded out in front of the jury to show them where the money Bankman-Fried was convicted of stealing went.

Now that its founder has been found guilty of perpetrating two counts of wire fraud conspiracy, two counts of wire fraud, one count of conspiracy to commit money laundering, conspiracy to commit commodities fraud, and conspiracy to commit securities fraud, the broader ecosystem is starting to react.

Each of Bankman-Fried’s first five charges, the fraud and money laundering convictions, carry a maximum sentence of 20 years in prison. The commodities and securities fraud convictions carry a maximum sentence of five years in prison, bringing his total sentencing maximum to 110 years.

Sentencing will take place March 28, 2024.

He has another upcoming criminal trial on five more charges that is scheduled for March 11, 2024.

The World Believed Him; He Stole Their Money

“Sam Bankman-Fried perpetrated one of the biggest financial frauds in American history — a multibillion-dollar scheme designed to make him the King of Crypto — but while the cryptocurrency industry might be new and the players like Sam Bankman-Fried might be new, this kind of corruption is as old as time,” said U.S. Attorney Damian Williams in a public statement Thursday after the conviction. “This case has always been about lying, cheating and stealing, and we have no patience for it.”

“This case is also a warning to every fraudster who thinks they’re untouchable, that their crimes are too complex for us to catch, that they are too powerful to prosecute, or that they are clever enough to talk their way out of it if caught,” Williams added. “Those folks should think again and cut it out. And if they don’t, I promise we’ll have enough handcuffs for all of them.”

U.S. Attorney General Merrick B. Garland said in his own statement: “This case should send a clear message to anyone who tries to hide their crimes behind a shiny new thing they claim no one else is smart enough to understand: the Justice Department will hold you accountable.”

The criminal trial, which began Oct. 5 moved quickly, particularly given its white-collar nature and the supposed complexity of the financial crimes being alleged.

The 12 jurors deliberated for fewer than five hours — and they spent some of that time eating pizza — before reaching a unanimous verdict across all seven counts.

See also: Physics of the FTX Bubble: Hot Air Rises Fastest

“Today’s swift and unanimous verdict confirms what we already knew: that SBF misled and deceived so many, from customers and employees to business partners and investors, including myself and Sequoia,” Sequoia Capital partner Alfred Lin, who invested in FTX, tweeted.

Sequoia published a hagiography of Bankman-Fried when the fraudster’s public image and crypto company’s valuation were both at their peak.

“Immediately after FTX collapsed, we extensively reviewed our due diligence process and evaluated our 18-month working relationship with SBF,” Lin added. “We concluded that we had been deliberately misled and lied to.”

The venture capital firm’s due diligence procedures were roundly mocked, scrutinized and even legislated against after the collapse of FTX.

Representatives from FTX’s other VC backers, including Thoma Bravo and Paradigm, have not made a public statement on their portfolio company CEO’s guilty verdict. Paradigm’s co-founder and managing partner, Matt Huang, was a government witness in the criminal case.

Read also: Why Can’t Bankman-Fried Stop Talking?

The media, for its part, is focusing its attention on the “spectacular” collapse, noting that Bankman-Fried’s fall from grace was as abrupt as it was stunning.

Other publications, from The New York Times to Business Insider, BBC, Vox and Wired, highlighted Bankman-Fried’s past-life role as the “face of crypto” or the “crypto king,” in some cases attempting to draw a parallel between his fraud conviction and the uncertainty facing the digital asset sector more broadly.

“The case against the founder of the failed FTX exchange had come to symbolize the excesses of the volatile cryptocurrency industry,” The New York Times wrote.

It is almost certain that Bankman-Fried will appeal his conviction.