It took exactly one year for Sam Bankman-Fried to transform from beloved billionaire entrepreneur to convicted felon. On Nov. 2, a New York jury found Bankman-Fried guilty on all seven counts he was charged with by the Department of Justice. TIME Tech Correspondent Andrew Chow watched the trial unfold from the courtroom and breaks down the case.
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00:00 So Sandbank-Binfried's fall from grace took exactly one year.
00:03 I'm Andrew Chow. I'm a technology correspondent at Time magazine.
00:14 I've been covering cryptocurrency for the last three years and I'm writing a book now about the rise and fall over that time period.
00:25 But when crypto really crashed the mainstream and millions of people became aware of crypto and its potential and then watched as it was sort of devoured from the inside by a group of scammers, which included Sandbank-Binfried.
00:39 Sandbank-Binfried was the CEO of FTX, which was a cryptocurrency exchange.
00:47 You can think of it kind of like a crypto bank in that people deposit money, real dollars onto FTX and then expect FTX to hold it for them.
00:57 The difference between a bank and exchange is that FTX stated that they were going to hold on to your money.
01:03 They were not going to invest it out into other investments for you to earn interest.
01:09 But it actually turned out that Sam was taking the money, putting it into his trading firm Alameda Research and then using customers' money to spend on all sorts of things, namely venture capital investments, real estate in the Bahamas where he lived, political donations and just expenses on the island.
01:28 Now, over the course of the last three years, Sandbank-Binfried became very, very successful, at least in the public.
01:36 FTX became the second biggest crypto exchange in the world.
01:40 He plastered his face and FTX's logo on stadiums and Super Bowl commercials, and he earned the respect and love of people around the world who thought he was using his platform for good.
01:56 He always talked about how much he was donating all of his money and using it for charitable causes.
02:01 It turned out that all that time he was giving some of his money away, but he was also using customers' money in a way that they did not realize to invest in all sorts of things that he wanted to do.
02:15 Sam's empire started to collapse when people started to realize that the money might not be there.
02:22 So on November 2nd, 2022, the crypto outlet CoinDesk published a leaked balance sheet of Alameda Research, Sam's trading firm.
02:30 And while Alameda was supposed to have billions and billions of dollars, almost unlimited money because they were supposedly so good at trading, this balance sheet showed that they were in a really shaky position.
02:41 And most of their assets were actually just in this coins that Sam had basically made up.
02:48 It shattered the confidence that the public had in Sam and his companies.
02:52 People started withdrawing money very fast.
02:56 So when all these people started to withdraw their money from the exchange, it turned out that FTX was unable to process all of the withdrawals.
03:03 And then it quickly became apparent that the company did not have the assets that it said it did.
03:09 So within two weeks of November 2nd, 2022, FTX was forced to file for bankruptcy.
03:14 One month later in December, Sam was arrested by the behavior authorities, extradited to the United States, charged with seven criminal counts.
03:24 On October 3rd, his trial started in the Southern District of New York.
03:29 It lasted one month.
03:31 And on November 2nd, he was convicted by a jury on all seven counts.
03:38 Sam is a very media savvy person.
03:42 And throughout the whole time over this year, he's been trying to deflect blame on others and say that he did not knowingly misuse funds.
03:52 And this continued through, you know, up until the trial when he pled not guilty to seven criminal charges, which were brought by the Department of Justice.
04:01 Despite the fact that three of his closest collaborators, essentially his inner circle, had all pled guilty and cut deals with the government to testify against him.
04:12 So in the beginning of the case, he faced a very steep uphill climb.
04:17 So over the course of the month, the government has made the case that Sam knowingly took customer funds and lied to the public repeatedly.
04:25 And Sam has made the case that he didn't know a lot of what was going on.
04:30 And he tried to pass the blame onto his co-conspirators.
04:34 For a couple of weeks, Sam's closest conspirators got up to the stand one by one and created this portrait of Sam as deceptive, as sort of the mastermind of
04:47 this fraud of like spelling out specific times that multiple or all of them got into a room together with Sam and Sam directed them to do illegal things.
04:57 Obviously, this is incredibly damaging for Sam's case.
05:01 And so he decided to testify himself to try to rebut their evidence and their recollections.
05:08 Now, this is incredibly risky for a defendant to take the stand themself.
05:14 On the one hand, it allows him to make the plea directly to the jury to look them in the eye and say, I did not intend to do these things.
05:22 They're lying to create sort of an emotional, direct appeal to the jury.
05:26 But it also opens you up to cross-examination when the prosecutors have been licking their chops this whole time to ask him questions about everything that he said in the past of like any potential discrepancies in his account.
05:43 And really hammer him.
05:45 And so when Sam decided to get on the stand, I think he thought he could persuade the jury of his viewpoint and deflect questions enough from the prosecutors.
05:54 I believe sitting in the courtroom that it did not go well for him at all.
05:59 He was very polished and charming when being questioned by his own lawyers.
06:05 But when he was confronted by the prosecutors, he was evasive.
06:10 He was kind of petulant.
06:11 He was sort of acting like a teenager.
06:14 He was trying to wriggle his way out of basically every single question.
06:18 Even the judge reprimanded him and said, just answer the question directly.
06:24 And the jury could see all this.
06:26 They could see the judge's impatience.
06:28 They could see Sam's evasiveness.
06:30 It was a very intense courtroom scene.
06:33 In the end, it only took them less than five hours to come to a unanimous verdict that Sam was guilty in all seven counts, which included wire fraud, conspiracy to defraud both customers and investors and money laundering.
06:48 And I think part of it is because the government did a remarkably good job on trying to distill it into what they argue are very simple composite parts, specifically that Sam said he wasn't going to use customers' money.
07:03 He lied about it repeatedly while knowingly using it and that the crime had very little to do with cryptocurrency at all.
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