Three hours were all a Manhattan jury needed to convict Sam Bankman-Fried of criminal fraud
Three hours were all a Manhattan jury needed to convict Sam Bankman-Fried of criminal fraud

Former FTX Chief Executive Sam Bankman-Fried, who faces fraud expenses over the collapse of the bankrupt cryptocurrency trade, arrives on the day of a listening to at Manhattan federal court docket in New York City, January 3, 2023.

David Dee Delgado | Reuters

In Sam Bankman-Fried’s fraud trial, prosecutors won quickly by protecting it easy.

Jurors needed solely about three hours of deliberations to discover the FTX founder responsible of seven criminal counts, which may quantity to a life sentence. For a high-profile monthlong trial that concerned almost 20 witnesses and a whole lot of displays, consultants instructed CNBC they’d by no means seen such a speedy determination.

“The jury got here again in subsequent to no time on seven counts of fraud and conspiracy, a cost that’s notoriously troublesome to show past a affordable doubt in typical circumstances, particularly for complicated monetary wrongdoing,” mentioned Yesha Yadav, professor of regulation and affiliate dean at Vanderbilt University.

Working within the authorities’s favor was a fundamental undeniable fact that’s accepted by nearly everybody: stealing cash is mistaken.

Both the prosecution and protection agreed that $10 billion in buyer cash that was sitting in FTX’s crypto trade went lacking, with some of it going towards funds for real estate, recalled loans, enterprise investments, and political donations. They additionally agreed that Bankman-Fried was calling the photographs.

The key query for jurors was one of intent. Did Bankman-Fried knowingly commit fraud in directing these payouts with FTX buyer money, or did he merely make some errors alongside the way in which?

Nicolas Roos and Danielle Sassoon, the 2 assistant U.S. attorneys who led the prosecution’s case by means of the trial, constantly reminded traders that billions of {dollars} went lacking on the expense of abnormal traders. Crypto could also be difficult as a result of it is unregulated and has been troublesome to categorize as a forex, commodity or one thing else.

Roos and Sassoon emphasised how little any of that mattered to the case at hand.

The prosecution known as as its first witness a London-based cocoa bean dealer who misplaced $100,000 on FTX. The investor, Marc-Antoine Julliard, turned to the platform in 2021 to diversify his holdings as a result of he mentioned the corporate seemed that it was reliable.

“The key at trial, other than the a number of cooperators, was the way in which by which prosecutors simplified the case and tried it as a garden-variety fraud as an alternative of as a complicated crypto scheme,” Renato Mariotti, a former prosecutor within the U.S. Justice Department’s Securities and Commodities Fraud Section, instructed CNBC.

Mariotti, who’s now a trial accomplice in Chicago with Bryan Cave Leighton Paisner, mentioned “The easier story is often the winner at a jury trial.”

Damian Williams, U.S. lawyer for the Southern District of New York, underscored that time in a press briefing after the verdicts were learn on Thursday night.

“While the cryptocurrency business may be new and the gamers like Sam Bankman-Fried may be new, this sort of corruption is as previous as time,” Williams mentioned. “This case has at all times been about mendacity, dishonest, and stealing, and we’ve got no persistence for it.”

Prosecutors had a lot going for them.

Bankman-Fried, the 31-year-old son of two Stanford authorized students, had shirked authorized recommendation nicely after FTX and sister hedge fund Alameda Research spiraled out of business in late 2022. He remained prolific and unfiltered in coping with the press, even talking publicly by video to journalist Andrew Ross Sorkin on the New York Times DealBook Summit, which befell three weeks after his crypto empire collapsed.

“What do your attorneys inform you proper now,?” Sorkin asked. “Are they suggesting that is a good thought for you to be talking?

“No, they’re very a lot not,” Bankman-Fried responded. “The basic recommendation — do not say something, recede into a gap. And that is not who I’m. It’s not who I would like to be.”

That interview, together with others, got here again to hang-out him. Audio and video clips and information excerpts, from earlier than, throughout and after FTX’s failure, gave the prosecution a mountain of proof on prime of the damning witness testimony it was in a position to current.

‘Impossible place’

In September of 2022, when the disaster had turn into evident internally, Bankman-Fried told CNBC that he had $1 billion in free money to deploy throughout the business. The following month, at an occasion in Washington, D.C., he boasted of FTX’s function in serving to to prop up the business by means of a cascade of failures.

In presenting these statements to the jury, the prosecution made clear that Bankman-Fried knew he was mendacity.

“SBF misplaced this case earlier than it began,” Mariotti mentioned. “He put his attorneys in an unattainable place by committing outlandish crimes and refusing to maintain his mouth shut even after it was obvious that he was underneath investigation.”

Sassoon ended by telling the jurors that Bankman-Fried thought he may idiot clients, reporters and the general public. Now, he was aiming to idiot them.

“Don’t fall for it,” she mentioned. “Find him responsible.”

Paul Tuchmann, a former federal prosecutor who’s at present a accomplice with Wiggin and Dana LLP, mentioned a three-hour deliberation for a trial of this size is “not widespread at all.”

“It actually goes to present the energy of the federal government’s case,” mentioned Tuchmann.

While prosecutors introduced up witnesses from Bankman-Fried’s internal circle who were cooperating as half of plea agreements, the protection’s case was principally constructed on testimony from the defendant himself. Tuchmann described Bankman-Fried’s efficiency as “unpersuasive.”

Sam Bankman-Fried’s mother and father, seated to the left, react to the decision. U.S. Attorney Damian Williams is seated to the far proper.

Artist: Elizabeth Williams

Starring for the prosecution was Caroline Ellison, Bankman-Fried’s ex-girlfriend and the previous head of Alameda. On the stand, Ellison, who pleaded responsible in December to a number of expenses, mentioned that she and Bankman-Fried dedicated “fraud, conspiracy to commit fraud and cash laundering.”

Jurors additionally received to hear Ellison on tape describing to staff the massive gap in FTX’s stability sheet and the disappearance of buyer cash. And they noticed text messages she despatched to Bankman-Fried, together with one because the grand scheme was falling aside, by which she wrote “that is the most effective temper I’ve been in in like a 12 months” as a result of the nightmare was all lastly coming to an finish.

“No one had a shred of assist for SBF, nor ought to they’ve,” trial lawyer James Koutoulas instructed CNBC.

Regarding the speedy deliberation, Koutoulas mentioned, “That’s sufficient time for everyone to be like, I’m glad it is over, let’s eat our cookies or our sandwiches, recap the information, and everyone say, ‘OK, nicely he is responsible, proper?'”

In addition to Ellison, the federal government known as to the stand FTX co-founder Gary Wang, who was Bankman-Fried’s childhood buddy from math camp, FTX’s former director of engineering Nishad Singh, and Bankman-Fried’s former roommate and senior FTX coder Adam Yedidia. FTX’s ex-general counsel Can Sun additionally testified.

“The prosecution featured no fewer than 4 cooperating witnesses from the senior ranks of the businesses, all of whom convincingly described the defendant because the chief of the fraudulent schemes,” mentioned Kevin J. O’Brien, a former assistant U.S. lawyer who focuses on white collar criminal protection in New York. “The prosecutors were assured, brisk and well-organized of their presentation, which juries in a complicated, prolonged case at all times recognize.”

The protection, led by Mark Cohen, tried to create affordable doubt by mentioning flaws in testimony. But O’Brien mentioned the protection failed to negate the essential information.

When Bankman-Fried took the stand over three separate days, he did himself no favors.

Bankman-Fried rushed by means of prolonged and convoluted sentences that at occasions were repetitive and contradictory. That’s when he was responding to his lawyer’s questions. On cross-examination, he clammed up, replying with “Yup,” and a few variation of “I do not recall” over 100 occasions.

Bankman-Fried’s determination to testify “backfired as a result of of inconsistencies in his testimony and his common lack of attraction,” mentioned O’Brien.

Mariotti credited the Justice Department for working “collaboratively and with urgency” with the Commodities Future Trading Commission and the Securities and Exchange Commission. That allowed the federal government to transfer swiftly whereas gathering extremely compelling proof.

“Sam Bankman-Fried might be remembered as one of the most important fraudsters of our lifetimes,” Mariotti mentioned. “He has lastly met a state of affairs that he cannot speak his method out of.”

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