How could I not make a blog about Sam Bankman-Fried who, yesterday, was found guilty of running a Ponzi scheme smash-and-grab using cryptocurrency? Well, I couldn’t, so here it is.
Yesterday Sam Bankman-Fried (SBF), the tousle-haired mogul who founded the FTX cryptocurrency exchange, was convicted of all seven charges of fraud and conspiracy after a month long trial that laid bare the hubris and risk-taking across the crypto industry. These charges carry a maximum sentence of 110 years.
Weirdly, I guess as it’s an American court, it will take four months until he is sentenced. Sentencing will take place on March 28 2024. I guess that’s because Judge Kaplan wants the government to tell him if a second trial for Bankman-Fried on other charges of campaign finance and foreign bribery will still be held. We shall see.
Should we feel sorry for SBF or anger. You can decide, but it is interesting that his three members of the inner circle, including his former muse Caroline Ellison, played such a part in his trial and now incarceration.
Ms Ellison ran Alameda, the funding twin of FTX, and kept a diary of her feelings in Google docs during 2022. Three months before the cryptocurrency market imploded last year, she wrote:
“I have been feeling pretty unhappy and overwhelmed with my job … at the end of the day I can’t wait to go home and turn off my phone and have a drink and get away from it all.”
She was a key witness in SBF’s trial.
Gary Wang, a co-founder of FTX, quickly testified that he and Bankman-Fried committed a multibillion-dollar fraud at the cryptocurrency exchange.
He was a key witness in SBF’s trial.
The Verge reports that Nishad Singh, the former director of engineering at FTX, took the stand and gave the most emotionally compelling testimony which then, on cross-examination, proved to be the most unreliable.
Singh condemned Bankman-Fried for continuing to make venture investments despite knowing the money came from customer funds, even calling the actions taken at FTX “evil.” But then, as the defence pointed out, Singh took out a loan from FTX to buy a $3.7 million house on Orcas Island in Washington after Singh had found out about the misuse of customer funds.
He was a key witness in SBF’s trial.
These three individuals agreed to plea deals to get off what could have been life sentences. Unfortunately for their young friend Sam, it looks like he will be in prison until his hair turns grey and his life is gone.
This definitely will become a movie, a case study, a legend and a tale of greed, glory, grab and gone.
Goodbye Sam Bankman-Fried. It was fun knowing you whilst it lasted, but some of us knew you were just a cryptopunk.
Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal's Financial News. To learn more click here...
