Tag Archives: Sam Bankman-Fried

Sam Bankman-Fried Convicted : Guilty Of FTX Fraud!

Sam Bankman-Fried (SBF) has been found guilty and convicted on all counts of defrauding customers of his crypto-exchange, FTX!

Sam Bankman-Fried Convicted : Guilty Of FTX Fraud!

Sam Bankman-Fried, who is also known simply as SBF, has been found guilty on all counts of defrauding the customers of his crypto-exchange, FTX, on Thursday, 2 November 2023.

The former crypto billionaire stood and faced the jury that delivered its verdict after just four hours of deliberations. He was found guilt on all seven counts of wire fraud and conspiracy to launder money, and now faces decades in prison at a separate sentencing hearing set for 28 March 2024.

The jury verdict brought an end to nearly a month of court proceedings, which saw his closest friends and partners turn witness against the former crypto king, and one of cryptocurrency’s most public faces.

Sam Bankman-Fried perpetrated one of the biggest financial frauds in American history – a multibillion-dollar scheme designed to make him the King of Crypto. This case has always been about lying, cheating, and stealing, and we have no patience for it.

– Manhattan US Attorney Damian Williams

SBF maintained his innocence right to the end, maintaining that while he made mistakes, he acted in good faith. After his conviction, his lawyer issued this statement:

We respect the jury’s decision. But we are very disappointed with the result. Mr Bankman-Fried maintains his innocence and will continue to vigorously fight the charges against him

– Sam Bankman-Fried’s lawyer, Mark Cohen

It is currently unknown if SBF plans to appeal the verdict. In any case, this won’t be the last we see of him, as Bankman-Fried is also set to go on trial on a second set of charges brought by prosecutors earlier this year, for alleged foreign bribery and bank fraud conspiracies.

Sam Bankman-Fried Conviction : Warning To Other Fraudsters

After the jury convicted SBF, Manhattan US Attorney Damian Williams warned other fraudsters to take note of his fate.

When I became US attorney, I promised we would be relentless in rooting out corruption in our financial markets. This is what relentless looks like. This case moved at lightning speed – that was not a coincidence, that was a choice.

This case is also a warning to every fraudster who thinks they’re untouchable, that their crimes are too complex for us to catch, that they are too powerful to prosecute, or that they are clever enough to talk their way out of it if caught.

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

Sam Bankman-Fried Conviction : All But Guaranteed

Sam Bankman-Fried’s conviction was all but guaranteed after three of his former close friends and colleagues, including former on-off girlfriend, Caroline Ellison, pleaded guilty and agreed to testify against him in hopes of reducing their own sentences. They are to be sentenced at a later date.

They helped convict SBF by presenting evidence that the crypto-trading firm Alameda Research received deposits on behalf of FTX customers from the early days of the exchange, when traditional banks were unwilling to let it open an account.

Bankman-Fried was accused of swindling FTX customers out of some $10bn. Prosecutors said that his fraud extended from 2019 to November 2022, when FTX collapsed under the weight of a liquidity crisis, caused by the lending of customer funds to Alameda Research, without FTX customer’s knowledge or approval.

Instead of safeguarding FTX customer funds, SBF used the money to repay Alameda lenders, buy property and make investments, as well as political donations. When FTX went bankrupt in November 2022, Alameda owed it US$8 billion.

He took the money. He knew it was wrong. He did it anyway, because he thought he was smarter and better and that he could figure his way out of it.

– Assistant US Attorney Nicolas Roos

Before FTX’s collapse of his companies, Sam Bankman-Fried was known for appearing frequently in Washington and in the media to promote cryptocurrency. Despite a market downturn, the rapid growth of FTX earned him the moniker – king of crypto, which now appears to be a mirage.

Caroline Ellison testified that Sam Bankman-Fried directed her to shuttle customer funds into Alameda after the spring 2022 crypto downturn. Alameda was saddled with billions of dollars in open-term loans, and lenders started demanding their money back that summer. Alameda couldn’t repay the loans, and Bankman-Fried blamed Ellison for not hedging the fund’s money earlier that year.

Wang similarly implicated his former friend, naming “Sam Bankman-Fried, Nishad Singh and Caroline Ellison”, when the prosecution asked, “Who are the main people you committed these crimes with?”

Wang also told jurors that Sam Bankman-Fried wasn’t shocked by FTX’s massive debt. After telling him about the debt, SBF said “that sounds correct” with “a neutral demeanor”.

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SBF Allegedly Hid $8 Billion In Korean Friend Account!

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The CFTC just alleged that Sam Bankman-Fried (better known as SBF) hid $8 billion of Alameda liabilities in a “Korean friend” account on the FTX crypto exchange!

SBF Allegedly Hid $8B Liabilities In Korean Friend Account!

In the spring of 2022, Alameda Research experienced a large number of margin and loan recalls following a major downturn in the crypto markets. To meet its external debt obligations, the trading firm “greatly increased” its usage of customer funds.

By the middle of 2022, Alameda’s total fiat liability with FTX was around $8 billion. That was when, the Commodity Futures Trading Commission (CFTC) alleged, Sam Bankman-Fried (better known as SBF) directed his executives to move approximately $8 billion of Alameda liabilities into an unknown customer account, which he would later refer to as “our Korean friend’s account” and/or “the weird Korean account”.

The CFTC added that even though this was a sub-account under Alameda, it was labelled as “FTX fiat old” and did not have the usual @alameda-research.com email account identifier. Instead, it was stored in an internal account in the FTX database as “fiat@ftx.com”

This allowed the liabilities in that account to be hidden on FTX ledgers. Yet, the “Korean friend” account had the same privileges as Alameda’s other accounts, including exemption from liquidation characteristics.

FTX Korean Friend Account Had Special Privileges!

The “Korean friend” account had privileges to execute a transaction on FTX, even if it did not have the funds to do so. It was accomplished through a piece of code labeled as “allow negative flag”.

Separately, Bloomberg reported on December 14, that a GitHub account under the name Nishad Singh (FTX’s former engineering director), created or annotated code linked to that “Korean friend” account.

Looking back at what SBF said about Alameda, the signs were there that Alameda Research was likely losing money hand over fist.

Back in September 2022, SBF said that they should have shut down Alameda Research a year ago – before it was hit by the crypto winter.

I only started thinking about this today, and so haven’t vetted it much yet. But I think it might be time for Alameda Research to shut down. Honestly, it was probably time to do that a year ago.

By the time he made that comment, SBF probably knew that it would be a matter of time before his house of cards came falling down…

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SBF Flew Business As Judge Recuses From FTX Case!

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The FTX drama continues as SBF was seen flying business class, while Judge Ronnie Abrams recused herself from the case!

Judge Ronnie Abrams Recuses From SBF FTX Case!

The FTX drama continues with the shocking announcement by US District Judge Ronnie Abrams over a potential conflict of interest.

On Friday afternoon, December 23, Federal Judge Ronnie Abrams of the US District Court for the Southern District of New York recused herself from the FTX case.

The judge’s husband, Greg D. Andres, is a partner at the law firm Davis Polk & Wardwell, which advised FTX in 2021. Though Andres himself did not personally advise FTX, Abrams chose to recuse herself from the case “to avoid any possible conflict, or the appearance of one.”

The order also stated that Davis Polk & Wardwell previously represented parties “that may be adverse to FTX and Defendant Bankman-Fried,” though Andres allegedly did not represent those clients either.

RONNIE ABRAMS, United States District Judge:

It has come to the Court’s attention that the law firm of Davis Polk & Wardwell LLP, at which my husband is a partner, advised FTX in 2021, as well as represented parties that may be adverse to FTX and Defendant Bankman-Fried in other proceedings (or potential proceedings). My husband has had no involvement in any of these representations. These matters are confidential and their substance is unknown to the Court. Nonetheless, to avoid any possible conflict, or the appearance of one, the Court hereby recuses itself from this action. See 28

U.S.C. § 455.

This decision came just one day after Sam Bankman-Fried (SBF) was released from custody pending trial on eight criminal charges including wire fraud, conspiracy to commit money laundering, and violations of federal campaign finance laws.

It is unknown why Judge Ronnie Abrams chose to wait until now to recuse herself from the FTX case. But it should be pointed that it was a different judge – Gabrial Gorenstein, who approved the record-setting $250 million bond that did not require SBF to pay a single cent up front.

A new judge from the Southern District of New York will now have to be selected to oversee Sam Bankman-Fried’s trial.

SBF Free + Flying Business On “No Cash Up Front” FTX Case Bail!

In the meantime, the disgraced FTX co-founder was spotted “chilling” in the American Airlines Greenwich Business Class lounge located at Terminal 8 of the John F. Kennedy International Airport, New York City.

Sam Bankman-Fried was accompanied by his parents, FBI agents and lawyers. He had full access to what looks like an Acer Predator gaming laptop, and a smartphone. When he was asked for a photo, SBF replied, “Haha maybe not today“.

You may recall that, on December 9, SBF claimed that he did not have access to (much of) his professional or personal data, despite having obvious access to a laptop and a mobile phone.

1) I still do not have access to much of my data — professional or personal. So there is a limit to what I will be able to say, and I won’t be as helpful as I’d like. But as the committee still thinks it would be useful, I am willing to testify on the 13th.

SBF was later spotted in the Business class section of an American Airlines flight, “disguised with a beanie”. He appeared to be engaged in conversation with a suited executive.

The suited executive could be his lawyer, Mark Cohen, who may have been accompanying the disgraced FTX co-founder to his parents’ home in Palo Alto, California, where he has to serve his house arrest while awaiting trial.

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SBF Released On “No Cash” $250 Million Bail Bond!

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Sam Bankman-Fried, better known as SBF, has been released on a “no cash up front” $250 million bail bond!

SBF Released On “No Cash Up Front” $250 Million Bail Bond!

FTX co-founder Sam Bankman-Fried, better known as SBF, has been released on a $250 million bond, but guess what – it does not actually require him to come up with the cash.

Instead, the release agreement showed that SBF was being released on a $250 million personal recognisance bond that was secured by his parents’ five-bedroom home in Palo Alto.

If SBF fails to appear in court, or violate other conditions of his bail, then the property would be seized. That property is estimated to be worth only $4 million.

In addition to his two parents, the bond must be signed by two other people (one of whom cannot be a relative) by January 5, 2023; and they would all be on hook for the $250 million bail.

This “no cash up front” bail deal was worked out between SBF’s legal team and US prosecutors, which included his agreement to be extradited to the United States.

New York federal court Judge Gabriel Gorenstein released him, subject to detention at his parents’ home while wearing an electronic monitoring bracelet, with mandatory mental health counselling and substance abuse treatment.

SBF had to surrender his passport under the bail agreement, and was stricter to travel to the Northern District of California, or the Southern and Eastern districts of New York for court appearances.

This was a fraud of epic proportions. If that was the only test, detention would likely be appropriate. But he voluntarily consented to extradition. That should be given weight.

If he had resisted, we would have opposed release. But his assets have diminished. This is a financial crime and he no longer works for FTX or Alameda. So the risk to the community is a marginal consideration. We propose a restrictive bail package.

– Assistant US Attorney Nick Roos

Sam Bankman-Fried faces up to 115 years in prison if convicted on all eight counts of wire fraud and conspiracy to commit securities fraud, money laundering, and violating campaign finance laws in his cryptocurrency exchange company, FTX.

His next hearing is set for January 3, 2022, and his defence is expected to be complicated by the fact that two of his chief lieutenants – Caroline Ellison and Gary Wang pleaded guilty and are now cooperating with investigations.

But until that he is convicted, SBF will be free to enjoy life at home, catching up on Netflix or the computer games he loves to play. Living with his parents may not be what every 30+ young man likes, but it sure beats jail in the Bahamas!

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Caroline Ellison, Gary Wang Plead Guilty To FTX Fraud!

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Both Caroline Ellison and Gary Wang just pleaded guilty to criminal charges related to the collapse of the FTX cryptocurrency exchange!

Caroline Ellison, Gary Wang Plead Guilty To FTX Fraud!

Caroline Ellison and Gary Wang – two close partners of Sam Bankman-Fried, plead guilty to criminal charges related to the collapse of the FTX cryptocurrency exchange. They are now helping investigators with their investigations, in exchange for reduced sentencing.

The charges, guilty pleas and their cooperation with investigators occurred earlier, but was kept quiet until Sam Bankman-Fried (better know as SBF) was safely on a flight to the US from the Bahamas after he agreed to voluntary extradition.

SBF landed in New York at 10 PM local time on December 21, and Southern District of New York attorney Damian Williams announced that Caroline Ellison and Gary Wang pleaded guilty to charges “related to their roles in the fraud that contributed to FTX’s collapse”.

As I said last week, this investigation is ongoing and moving very quickly. I also said last week’s announcement would not be our last and let me be clear once again, neither is today’s.

I’m announcing that SDNY has filed charges against Caroline Ellison […] and Gary Wang […] in connection with their roles in the frauds that contributed to FTX’s collapse. Both Ms. Ellison and Mr. Wang have plead guilty to those charges and both are cooperating with the SDNY.

Caroline Ellison was the head of Alameda Research – the trading firm started by SBF, which allegedly had “a virtually unlimited line of credit” funded by FTX customers. A former Google employee and MIT graduate, Gary Wang co-founded FTX with Sam Bankman-Fried.

Ellison plead guilty to seven charges, which could result in up to 110 years of jail time. Gary Wang plead guilty to four charges. However, more charges could follow if investigators find evidence of other crimes.

Caroline Ellison, Gary Wang Also Faces SEC Charges

These criminal charges were paired with civil charges by the US Securities and Exchange Commission (SEC), which accused Ellison, Wang and Sam Bankman-Fried of securities violations related to FTX’s cryptocurrency, FTT.

The SEC also noted that both Ellison and Wang are cooperating with its ongoing investigations.

Washington D.C., Dec. 21, 2022 — The Securities and Exchange Commission today charged Caroline Ellison, the former CEO of Alameda Research, and Zixiao (Gary) Wang, the former Chief Technology Officer of FTX Trading Ltd. (FTX), for their roles in a multiyear scheme to defraud equity investors in FTX, the crypto trading platform co-founded by Samuel Bankman-Fried and Wang. Investigations into other securities law violations and into other entities and persons relating to the alleged misconduct are ongoing.

According to the SEC’s complaint, between 2019 and 2022, Ellison, at the direction of Bankman-Fried, furthered the scheme by manipulating the price of FTT, an FTX-issued exchange crypto security token, by purchasing large quantities on the open market to prop up its price. FTT served as collateral for undisclosed loans by FTX of its customers’ assets to Alameda, a crypto hedge fund owned by Wang and Bankman-Fried and run by Ellison. The complaint alleges that, by manipulating the price of FTT, Bankman-Fried and Ellison caused the valuation of Alameda’s FTT holdings to be inflated, which in turn caused the value of collateral on Alameda’s balance sheet to be overstated, and misled investors about FTX’s risk exposure.

In addition, the complaint alleges that, from at least May 2019 until November 2022, Bankman-Fried raised billions of dollars from investors by falsely touting FTX as a safe crypto asset trading platform with sophisticated risk mitigation measures to protect customer assets and by telling investors that Alameda was just another customer with no special privileges; meanwhile, Bankman-Fried and Wang improperly diverted FTX customer assets to Alameda. The complaint alleges that Ellison and Wang knew or should have known that such statements were false and misleading.

The complaint also alleges that Ellison and Wang were active participants in the scheme to deceive FTX’s investors and engaged in conduct that was critical to its success. The complaint alleges that Wang created FTX’s software code that allowed Alameda to divert FTX customer funds, and Ellison used misappropriated FTX customer funds for Alameda’s trading activity. The complaint further alleges that, even as it became clear that Alameda and FTX could not make customers whole, Bankman-Fried, with the knowledge of Ellison and Wang, directed hundreds of millions of dollars more in FTX customer funds to Alameda.

The SEC is calling for a civil penalty, and a ban for Ellison and Wang to ever serve as a company director or officer, as well as “disgorgement of their ill-gotten gains”, and an injunction against future securities violations and limiting them to only buy and sell securities for their own accounts.

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SEC Charges Reveal Fraud Committed By SBF In FTX!

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FTX founder Sam Bankman-Fried, popularly known as SBF, has just been charged with fraud by the SEC.

Take a look at the charges the SEC brought against SBF, and find out what they reveal about the fraud committed at FTX!

FTX Founder SBF Arrested, Awaiting US Extradition!

On Monday, December 12, 2022, the Royal Bahamas Police Force arrested FTX founder, Sam Bankman-Fried who is popularly known as SBF in the cryptocurrency community.

SBF was arrested after the United States government formally notified the Bahamas government that it filed criminal charges and is likely to request his extradition.

The Attorney General of the Bahamas then ordered SBF’s arrest, to hold him in custody until a formal request for extradition comes forth. Then the Bahamas intends to process the extradition request “promptly”.

SEC Charges Reveal Fraud Committed By SBF In FTX!

On Tuesday, December 13, 2022, the US Securities and Exchange Commission (SEC) charged SBF with “orchestrating a scheme to defraud equity investors in FTX Trading Ltd. (FTX)”.

The SEC also sought injunctions against future securities law violations, an injunction against SBF participating in securities (except for his personal account), the disgorgement of his “ill-gotten gains”, a civil penalty, and barring him from being an officer or director of any company.

“We allege that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto,” said SEC Chair Gary Gensler. “The alleged fraud committed by Mr. Bankman-Fried is a clarion call to crypto platforms that they need to come into compliance with our laws.”

FTX Customer Funds Funnelled To Alameda

The SEC accused SBF of funnelling FTX customer funds to Alameda Research, which were then used to fund speculative investments, and provide large loans to Bankman-Fried and top FTX executives.

Customer Funds Used For Real Estate Purchases

SBF allegedly used the commingled funds from Alameda to pay for massive real estate purchases, including office space and luxury condominiums in The Bahamas.

“FTX operated behind a veneer of legitimacy Mr. Bankman-Fried created by, among other things, touting its best-in-class controls, including a proprietary ‘risk engine,’ and FTX’s adherence to specific investor protection principles and detailed terms of service. But as we allege in our complaint, that veneer wasn’t just thin, it was fraudulent,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement.

Customer Funds Used For Political Contributions

The SEC also alleged that SBF used commingled funds to fund political contributions. He was one of the top political donors in the 2022 election cycle.

SBF Was Both Borrower + Lender

According to the SEC, Sam Bankman-Fried was both the borrower and the lender in two instances. SBF also executed more than $1 billion from promissory notes for loans from Alameda Research.

SBF Accused Of Misleading Investors

The SEC also alleged that SBF misled investors into believing that FTX was a safe and responsible crypto asset trading platform, thus allowing FTX to raise more than $1.8 billion in funds from 90 US investors.

FTX Exposure To Alameda Not Disclosed

The SEC also alleged that Sam Bankman-Fried failed to disclose FTX’s deep exposure to Alameda, or how he was diverting FTX customer funds to Alameda for its own trading operations, or other purposes that SBF saw fit.

There was no meaningful distinction between FTX customer funds and Alameda’s own funds. Bankman-Fried thus gave Alameda carte blanche to use FTX customer assets for its own trading operations and for whatever other purposes Bankman-Fried saw fit.

The complaint alleges that, in reality, Bankman-Fried orchestrated a years-long fraud to conceal from FTX’s investors

(1) the undisclosed diversion of FTX customers’ funds to Alameda Research LLC, his privately-held crypto hedge fund;

(2) the undisclosed special treatment afforded to Alameda on the FTX platform, including providing Alameda with a virtually unlimited “line of credit” funded by the platform’s customers and exempting Alameda from certain key FTX risk mitigation measures; and

(3) undisclosed risk stemming from FTX’s exposure to Alameda’s significant holdings of overvalued, illiquid assets such as FTX-affiliated tokens.

The complaint further alleges that Bankman-Fried used commingled FTX customers’ funds at Alameda to make undisclosed venture investments, lavish real estate purchases, and large political donations.

In addition to the SEC charges, the US Attorney’s Office for the Southern District of New York and the Commodity Futures Trading Commission (CFTC) also announced charges against Sam Bankman-Fried.

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FTX Founder SBF Arrested, Awaiting US Extradition!

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FTX founder Sam Bankman-Fried, popularly known as SBF, has just been arrested in the Bahamas, and is awaiting extradition by US authorities!

FTX Founder SBF Arrested, Awaiting US Extradition!

On Monday, December 12, 2022, the Royal Bahamas Police Force arrested FTX founder, Sam Bankman-Fried who is popularly known as SBF in the cryptocurrency community.

SBF was arrested after the United States government formally notified the Bahamas government that it filed criminal charges and is likely to request his extradition.

Attorney Damian Williams for the United States Attorney’s Office for the Southern District of New York (SDNY) confirmed that the request was made by the US government based on a sealed indictment filed by the SDNY.

USA Damian Williams: Earlier this evening, Bahamian authorities arrested Samuel Bankman-Fried at the request of the U.S. Government, based on a sealed indictment filed by the SDNY. We expect to move to unseal the indictment in the morning and will have more to say at that time.

— US Attorney SDNY (@SDNYnews) December 12, 2022

When unsealed, charges that SBF potentially face include wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy, and money laundering. SBF could potentially face a life sentence in prison.

FTX Founder SBF Arrested : Official Statement

Here is the official statement issued by the Office of the Attorney General & Ministry of Legal Affairs, of the Commonwealth of The Bahamas.

Statement from the Attorney General of The Bahamas Sen. Ryan Pinder KC on the arrest of Sam Bankman-Fried

On 12 December 2022, the Office of the Attorney General of The Bahamas is announcing the arrest by The Royal Bahamas Police Force of Sam Bankman-Fried (“SBF”), former CEO of FTX.

BF’s arrest followed receipt of formal notification from the United States that it has filed criminal charges against BF and is likely to request his extradition.

As a result of the notification received and the material provided therewith, it was deemed appropriate for the Attorney General to seek BF’s arrest and hold him in custody pursuant to our nation’s Extradition Act.

At such time as a formal request for extradition is made, The Bahamas intends to process it promptly, pursuant to Bahamian law and its treaty obligations with the United States.

Responding to BF’s arrest, Prime Minister Davis stated, “The Bahamas and the United States have a shared interest in holding accountable all individuals associated with FTX who may have betrayed the public trust and broken the law. While the United States is pursuing criminal charges against BF individually, The Bahamas will continue its own regulatory and criminal investigations into the collapse of FTX, with the continued cooperation of its law enforcement and regulatory partners in the United States and elsewhere.

December 12, 2022
Office of The Attorney General & Ministry of Legal Affairs
Commonwealth of The Bahamas

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He continues to devote countless hours every day writing about tech, medicine and science, in his pursuit of facts in a post-truth world.

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