- Sam Bankman-Fried, the founder of FTX, was convicted of embezzlement in a landmark decision.
- The conviction marked a significant victory for the U.S. Justice Department and Damian Williams.
- Trust assets worth an estimated $744 million are set to be sold, allowing for creditor distributions.
On Thursday, Sam Bankman-Fried, the founder of FTX, was convicted of embezzlement from the customers of his cryptocurrency exchange, which has since gone bankrupt. This landmark decision solidified the downfall of the 31-year-old former billionaire, as reported by Reuters.
In a Manhattan federal court, a 12-person jury unanimously found Bankman-Fried guilty of all seven charges he was facing following a month-long trial. During the trial, the prosecution argued that he had selfishly plundered $8 billion from the exchange’s customers. The judgment was delivered nearly a year after FTX’s rapid corporate collapse, a stunning event that sent shockwaves through financial markets and wiped out his estimated $26 billion personal wealth.
The jury arrived at its decision after slightly more than four hours of deliberation. Bankman-Fried, who had maintained his innocence on two fraud charges and five conspiracy charges, stood before the jury with his hands folded in front of him as the verdict was announced.
Meanwhile, this conviction marked a significant triumph for the U.S. Justice Department and Damian Williams, the leading federal prosecutor in Manhattan, who had prioritized the eradication of financial market corruption. Speaking to reporters outside the courthouse, Williams emphasized,
“The crypto industry might be new, the players like Sam Bankman-Fried may be new, but this kind of fraud is as old as time and we have no patience for it.”
Damian Williams, Manhattan federal prosecutor
Once celebrated as a prominent figure in the cryptocurrency realm, Bankman-Fried, known for his disheveled curly hair and his preference for shorts and T-shirts over formal business attire, now finds himself in the company of other infamous figures convicted of significant financial crimes in the United States, including admitted Ponzi schemer Bernie Madoff and “Wolf of Wall Street” fraudster Jordan Belfort.
U.S. District Judge Lewis Kaplan scheduled Bankman-Fried’s sentencing for March 28, 2024. The Massachusetts Institute of Technology alumnus may potentially face several decades behind bars.
Following the verdict, FTX, along with its creditors, have formally requested approval from the U.S. bankruptcy court in Delaware to proceed with the sale of certain trust assets, in a court filing on November 3. These assets include funds held by Grayscale and Bitwise, with an estimated total value of $744 million.
The court filing outlined that the Debtors’ proposed sale or transfer of the Trust Assets serves the purpose of preparing for future monetary distributions to creditors and allows for prompt action in selling these assets when the timing is ideal. Moreover, conducting these sales in accordance with the Sale Procedures would streamline the process, reducing the associated expenses and delays of filing separate motions for each proposed sale, as the assets may be sold to one or more buyers in one or multiple transactions.
These assets are primarily held in five Grayscale Trusts, with a combined estimated value of $691 million, and one trust under the management of Bitwise, which amounts to $53 million. These valuations are based on market values as of October 25, 2023. These trusts serve as a means for investors to access exposure to digital assets without directly owning those assets.
