The erstwhile CEO of the now-defunct cryptocurrency exchange FTX was found guilty on seven counts of fraud and conspiracy to launder money in November. His sentencing to a lengthy term in federal prison followed in late March. Bankman-Fried, 32, had indicated his intention to challenge the court's decision shortly after his sentencing. The basis for his appeal, which could potentially take years, remains unclear.
FTX, which was once valued at $32 billion, collapsed in late 2022, filing for bankruptcy amid a broader cryptocurrency crash. The company had utilized customer funds for high-risk investments through its closely affiliated hedge fund, Alameda Research. Bankman-Fried himself had misappropriated his customers' money for personal extravagances, including substantial political donations, a collection of high-end vehicles, luxury properties in the Bahamas, and celebrity endorsements. When customers requested the return of their funds, a significant budget deficit was revealed. Prosecutors described his actions as "old-fashioned embezzlement" masked by the veneer of innovative technology. In total, Bankman-Fried was found to have stolen $8 billion from his customers.
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During his sentencing, Bankman-Fried expressed his regret, stating, "I'm sorry about what happened at every stage." However, Judge Lewis Kaplan suggested that Bankman-Fried had not shown genuine remorse. Prosecutors had sought a sentence of 40-50 years, while his defense attorney requested a mere six.
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Despite his conviction, Bankman-Fried, the founder of the failed company, has consistently proclaimed his innocence, both following his arrest and throughout his trial. He chose to testify on his own behalf, a move often considered risky for defendants. His confidence, however, failed to sway the jury. Key members of his inner circle, including Caroline Ellison, his intermittent girlfriend and the CEO of Alameda Research, testified against him, with Ellison serving as the prosecution's star witness.
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As Bankman-Fried pursues his appeal, FTX is embroiled in intricate and contentious bankruptcy proceedings. He has repeatedly claimed that the company possessed sufficient assets to refund customers' deposits, a claim that led FTX's interim CEO to describe Bankman-Fried as living "a life of delusion" in court documents. The interim CEO suggested that while it was possible for FTX customers to recover their funds, the chances were slim.
Bankman-Fried is not the only cryptocurrency executive facing severe legal challenges. Last week, Terraform Labs and its former CEO Do Kwon were found guilty of fraud for misleading investors in a case in New York City. The former CEO, who has been detained in Montenegro since early last year, remains a fugitive. Changpeng Zhao, the former CEO of Binance, the world's largest cryptocurrency exchange, is due to be sentenced later this month for failing to implement anti-money laundering measures at his company. He has agreed to pay a $50 million fine and resign as CEO.
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