FTX founder Sam Bankman-Fried is guilty of fraud

During Sam Bankman-Fried’s monthlong fraud trial, prosecutors presented damning evidence that the fallen crypto founder knew full well what he was doing from the beginning. He knew that Alameda Research borrowed billions in customer funds from FTX. He knew his fellow executives fabricated balance sheets to send to lenders. He knew FTX wasn’t fine when he told customers it was.

In cryptoland, the response to these revelations was largely to condemn Bankman-Fried and FTX as an aberration. When the truth about FTX came out, Binance CEO Changpeng “CZ” Zhao slammed Bankman-Fried, saying he “lied to everyone.” Similarly, Coinbase CEO Brian Armstrong wrote on X (formerly Twitter) that “even the most gullible person should not believe Sam’s claim” that the missing funds stemmed from an accounting error.

The jury took a little over four hours to reach a verdict. When Joseph Bankman and Barbara Fried, the defendant’s parents, came into the courtroom, they looked frightened. Bankman put his arm around Fried as they sat down on the wooden benches. Fried put her head in her hands.

Sam Bankman-Fried stood to hear the jury’s verdict. After the first “guilty” was read aloud — for wire fraud — his father doubled over. His mother’s hands rose to cover much of her face, either to stifle tears or to hide them. As the judge thanked the jury for their service, Barbara Fried recovered herself enough to gently rub Joseph Bankman’s back.

Former cryptocurrency kingpin Sam Bankman-Fried has been found guilty of fraud. A New York jury delivered the verdict on November 2nd, concluding a trial that has seen Bankman-Fried defend himself against claims that he criminally mismanaged his crypto exchange FTX and trading firm Alameda Research.

After more than a month in trial, the jury took four and a half hours to decide Bankman-Fried’s fate, declaring him guilty on all seven charges, including wire fraud, conspiracy to commit wire fraud, and conspiracy to commit money laundering. He is set to be sentenced by Judge Lewis Kaplan on March 28th of next year and faces decades in prison.

Let’s be honest: The facts are bad for Sam Bankman-Fried. The prosecution, in the closing statement delivered by Nicolas Roos (pronounced “Rose”, though he won’t correct you if you get it wrong, as Judge Lewis Kaplan did for most of the trial) today, went through a lot of contemporaneous written evidence that suggested that Bankman-Fried was very, very guilty of wire fraud and conspiracy charges at FTX. Roos gave a confident, restrained argument, relying heavily on that evidence to argue Bankman-Fried had used FTX customer deposits as his own private piggy bank, funneling them through his trading firm, Alameda Research.

He also pointed to why Bankman-Fried had done it: “The defendant was greedy.” 

Let’s say I am the owner of a hedge fund, and one fine June day, my employees come to me and say, “Hey, Liz, we have an accounting problem. We are missing several billion dollars.” How would I react?

I have been wondering this since Danielle Sassoon walked Sam Bankman-Fried through his reaction to the FTX software bug fixed by Adam Yedidia. In my case, there would probably be shouting? Like, a lot of shouting. I would also probably have my assistant figure out which law enforcement agency to call immediately. Misplacing $900 million is a five-alarm fire even for Citibank; misplacing several billion is kicking over a lantern in Chicago in 1871.

Midway through Sam Bankman-Fried’s cross examination, as prosecutor Danielle Sassoon went through a brutal line of questioning like a hot buzzsaw through a butter cow, I found myself reflecting on how smart the average person is. Maybe they don’t know calculus. Maybe they’ll never read Ulysses. Maybe they can’t code. But they definitely know how to identify bullshit when they see it. 

So if you, like Bankman-Fried, have moved into the Clintonian territory of “it depends on how you define ‘trading’’” you done fucked up, son. Make whatever “sophisticated” argument you like; even the stupid will see through it. 

It is honestly kind of incredible to watch a man torpedo his own credibility on direct testimony. We’re not even at the cross yet, and the judge has already instructed him to answer the question he’s being asked by his own lawyer. 

The jury is watching all of this intently. 

Sam Bankman-Fried is so fucked.

I have come to court every day since opening arguments thinking, Surely things cannot get worse for this man. Surely we have reached the bottom. Unfortunately, there is no bottom — in the prosecution’s telling, FTX and Alameda Research, his exchange and trading company, were matryoshka dolls of crime. Today, the defense started its case, which should theoretically present Bankman-Fried in a better light. But if what I saw of him on the stand is any indication, he may be more damning for himself than any of the prosecution’s witnesses.

Sure, Sam Bankman-Fried’s trial has revealed that FTX was basically a seething mass of scams. But it has also revealed how Bankman-Fried blew up the lives of the people who are closest to him.

Of course everyone who had money trapped on the FTX exchange when it collapsed — as the result of Bankman-Fried’s trading firm Alameda Research purloining its customers’ funds — had their lives altered. Even if they are made whole by the bankruptcy proceedings, that’s still money that they should have had access to at any time they wanted it. That may mean houses that weren’t purchased, medical procedures that were left undone, and life savings lost.

Sam Bankman-Fried will testify at his criminal fraud trial on Thursday as he faces charges of fraud, conspiracy, and money laundering related to his failed cryptocurrency exchange FTX.

During a conference call on Wednesday, attorney Mark Cohen confirmed Bankman-Fried will take the stand. The move isn’t much of a surprise, considering the time Bankman-Fried spent speaking on his own behalf between the collapse of FTX last year and his eventual arrest last December.

It is one thing to type the world YOLO, jokingly, on Beyoncé’s internet. It is another thing entirely to hear it explained in a court of law. The trial of Sam Bankman-Fried has been, in its vocabulary, tragically millennial. (Disclosure: I am also a millennial.)

Christian Drappi, a former Alameda software engineer, was put in the position of explaining YOLO — “you only live once” — as well as the phrase “a YOLO thing” to anyone who might be unfamiliar. He was testifying about a recording of an Alameda all-hands meeting in which Caroline Ellison, then the CEO of Alameda, confessed to taking FTX customer funds. In the recording, Drappi said “I’m sure this wasn’t, like, a YOLO thing” in response to the confession.