The significance of FTX founder Sam Bankman-Fried’s fraud conviction

Geoff Bennett:

FTX founder Sam Bankman-Fried has been found guilty for fraud and for his role in the collapse of the now bankrupt cryptocurrency exchange.

John Yang looks at the significance of this case.

John Yang:

Geoff, it took a jury just over four hours to convict Sam Bankman-Fried on one of the biggest financial frauds in history. Investors lost nearly $10 billion.

Afterward, federal prosecutor Damian Williams said crooked financiers should take note.

Damian Williams, U.S. Attorney, Southern District of New York: It's a warning, this case, to every single fraudster out there who thinks that they're untouchable or that their crimes are too complex for us to catch, or that they're too powerful for us to prosecute, or that they could try to talk their way out of it when they get caught.

Those folks should think again and cut it out. And, if they don't, I promise well have enough handcuffs for all of them.

John Yang:

The maximum prison time in the seven charges that Bankman-Fried was convicted totals 110 years.

Crystal Kim is a New York-based crypto reporter for Axios. She covered the five-week trial.

Crystal, the big moment in this trial was when Sam Bankman-Fried took the stand. Always a gamble for a defendant to testify in his own defense. He was on the stand for three days. How did he do? Did he help himself or hurt himself?

Crystal Kim, Axios:

Well, you're right to say that former federal prosecutors say that the best thing a defendant can do is to take the witness stand to explain in their own words what happened and why they're innocent.

But I think Sam did more damage than good. He was evasive. He couldn't remember key events or things he said, including congressional testimony, which the prosecution was only too happy to check him on. His behavior only added fuel to the U.S. government's closing statements. They counted it up and found that Sam's memory failed him more than 140 times during the cross-examination.

John Yang:

And the prosecution case, how effective was it, in your mind?

Crystal Kim:

Oh, the U.S. government had a solid case against Sam. They had the testimonies of his three lieutenants.

That's Caroline Ellison, Gary Wang, and Nishad Singh. They all pled guilty. And when they were asked who they committed these crimes with, they pointed the finger at Sam. Not only that, but the prosecution had a mountain of evidence to support what they were saying.

John Yang:

You talk about that mountain of evidence, I read some six million e-mails, slack messages, other digital messages.

And yet this trial, for a complex financial — white-collar financial fraud case moved very quickly. It was 11 months between arrest and conviction. How do you think the government was able to sift through all that evidence and present a case so quickly?

Crystal Kim:

I think the testimonies and the cooperation of their three key witnesses helped.

John Yang:

What does this mean for the crypto industry?

Crystal Kim:

Well, as you mentioned before, this is what U.S. prosecutors have called one of the biggest financial fraud cases in history.

It was a black eye to the industry that FTX, once the third largest crypto exchange in the world, collapsed. That someone has finally been held accountable and — for its collapse and the people burned in its process should be cathartic for the industry. I think you will find some folks are taking victory laps.

John Yang:

And what about potential regulation or laws to regulate the industry? Is this going to give impetus to that?

Crystal Kim:

It may.

There are a couple of crypto bills that are in circulation, but we will see if they see any progress in the months coming.

John Yang:

And this is not the last time that Sam Bankman-Fried is going to be sitting at the defendant's table in a court, courtroom. Is that right?

Crystal Kim:

Right.

Well, Sam was taken into custody, and he will likely stay at Metropolitan Detention Center until his next trial, which is slated for March 11, 2024. This relates to the bank fraud charge and bribing a foreign government official, though reporters at the trial have been debating whether the case gets dropped before then, given the prosecution's victory yesterday.

John Yang:

Crystal Kim of Axios, thank you very much.

Crystal Kim:

Thank you for having me.