FTX Founder Faces 115 Years in Prison

hi welcome to another episode of Cold Fusion on October 16th 2023 a young man looked around the courtroom nervously he made eye contact with his ex-girlfriend Caroline Ellison she was about to testify and expose the dark depths of his deception with every word that came out of her mouth his whole world began to collapse and by the end of her statement he was finished just a year ago he was the darling of the cryptocurrency world his company was worth $32 billion but now that was all gone he was now facing seven charges and up to 115 years in prison the scene I'm describing is of course the trial of Sam bankman freed if you've been following this channel for a little while you would have seen my piece on the multi-billion dollar FTX collapse it really was an unbelievable story of how a group of ragtag kids could engineer a fraud so large that they bought themselves government influence today we'll take a look at the court case you are watching Fusion TV so to bring everyone up to speed a quick recap FTX was a cryptocurrency exchange and hedge fund it was founded in 2019 by Sam bankman freed AKA s SPF his then girlfriend Caroline Ellison was in charge of alam research a trading house Sam would insist that these two companies were separate entities but behind the scenes FTX was using customer funds and giving them to Alam research and these customer funds were squandered from its Inception FTX funneled consumer deposits into bank accounts owned or managed by Alam according to the Department of Justice and SEC bankman freed also personally borrowed more than $1 billion from Alam again this was all funded by FTX customers he also approved similar loans to his parents and FTX Executives but on the surface everything was perfect FTX was growing quickly in size and by 2021 they had celebrity endorsements a Stadium named after them and Sam himself was even mixing with politicians in September of 2022 Bloomberg reported the close ties between FTX and Alam then on November 2nd of 2022 coind Des published an article that exposed that 5.8 billion out of the 14.6 billion of assets on the balance sheets of alam research were linked to an FTX crypto token that was made out of thin air I've covered the full story of this in the previous episode but long story short this triggered a massive selloff of people trying to get their money out in the end FTX couldn't pay back their customers as their deposits were loan to Alam essentially FTX users couldn't withdraw their fund and the company would file for bankruptcy on November 11th 2022 a month later Sam bankman freed was arrested in the Bahamas where FTX was headquartered and then he was extradited to the US he was placed under house arrest but was taken into custody in August okay so let's talk about the trial on the 3rd of October SPF began his trial at a court in New York there are going to be two trials but the second will be in March 20124 as for the charges on the first trial there're essentially multiple counts of wire fraud and moneya laundering the United States government is accusing s SPF and his friends of misappropriating consumer funds and giving it to Alam research they were lying to Consumers lenders and investors which amounts to fraud s SPF was also accused of being the leader of the scheme so we all know that billions in consumer funds disappeared and that was only highlighted when people panicked and all tried to get their money out of FTX all at once but where did the money go well s SPF either lost it in Risky Investments Acquisitions debt servicing making loans to himself and others A-list celebrity endorsements marketing campaigns and of course political donations according to the courts bankman freed spent $100 million in political contributions and bought a $40 million Penthouse where he and other FTX Executives lived the loans were also used to buy luxury Jets and the SEC claims that these transactions were quote at times not documented at all the hope is that 90% of these funds will eventually be recovered and return to the victims during the trial SPF and the defense made him out to be an overworked young businessman that was just trying to do the right thing he simply just made a few mistakes maybe his risk management wasn't perfect but he never purposefully tried to defraud anyone he said that he didn't know that the funds of FTX customers were being misused until just before the collapse Sam's defense team blamed his ex-girlfriend for the bankruptcy of of both companies emphasizing her ineptitude and failure to hedge alam's Financial positions but unfortunately for Sam his ex-friend Caroline would sing like a bird and destroy him Caroline Ellison the CEO of alam research and the ex-girlfriend of Sam was about to testify there was no one better positioned and no one closer to Sam she was the perfect person to shed light on his actions the pair of them would meet at Jane Street a trading firm where they both worked after colle Caroline took to the stand she was asked to point out Sam in the crowd and describe what he was wearing he's over there wearing a suit yes that's right for today Sam had ditched his trademark black T-shirt and cargo shorts for a gray suit and purple tie in the courtroom the prosecutor Danielle suon asked Caroline quote when you were working at Alam did you commit any crimes Ellison replied yes we did suon continues quote when you say we who do you mean by we Caroline I mean Sam and I and others fraud conspiracy to commit fraud and moneya laundering suon did you commit these crimes alone Ellison replied no they were committed with Sam Caroline Ellison would go on to say that the decision to use FTX consumer funds to cover alam's losses was quote Sam's decision interestingly in the court hearing she also mentioned that Sam wanted to become the president of the United States Someday I'm sure that would have been interesting she would also go on to testify about how important Sam's image was including specifically his hair Sam once stated quote I honestly think it's negative estimated value for me to cut my hair I think it's important for people to think I look crazy Sam's attorney would later hilariously State quote there was a time when Sam was probably the worst dressed CEO in the world and had the worst haircut but that's not a crime end quote in the end Ellison pleaded guilty to seven criminal charges including wire fraud Securities fraud and money laundering she also admitted to giving her parents a $100,000 loan Barbara freed and Joseph bankman are Sam's parents and ironically they're both professors of get this legal ethics at Stanford law it's suspected that their expertise reputation and connections helped FTX seem legitimate at least in the beginning Sam's parents attended almost every day of the trial and were close advisers to Sam Sam even previously referred to FTX as quote a family business at one point during the court case it was revealed that at least Sam's dad is a piece of work in a revealed Email exchange he complained that being paid $200,000 for advertising FTX was a pittance quote G Sam I don't don't know what to say here this is the first I have heard of a 200k a year salary putting Barbara on this end quote that was written to his son in January of 2022 Sam seemingly listened to his parents and less than 2 weeks later they received $10 million from Alam research and a $10 million Bahamas property during the court case a major problem for Sam was that he just didn't keep his mouth shut before his arrest the FTX founder did a string of high-profile media interviews he appeared on podcasts and tweeted incessantly and in the courtroom the comments that he would make during these interviews came back to haunt him during his cross-examination time and time again the prosecution would refer to incriminating statements that Sam gave during these media tours they would ask Sam so did you say the statement and Sam would always say I don't remember and then the prosecution would show evidence of him saying that exact thing Paul tuchman a former prosecutor sums it up perfectly if there's anything for bankman freed to regret it is not the decision to testify but the public statements he made before his arrest he made it significantly easier for the prosecution he made his bed now he lying in it Sam bankman freed got demolished in the courtroom he stood up to hear what the jury had decided in only a matter of hours they found him guilty on all counts once the verdict was read he sat back down with no emotion his parents on the other hand appeared distraught according to Wired Magazine quote s spf's Father Joseph bankman leaned forward holding his hands on the side of his head his mother Barbara freed clutched her hands to her face before long they were holding one another it was over for SPF he was whisked away way and he took one last look at his parents only giving a small resigned nod of acknowledgement and with that he was gone Sam bankman freed faces up to 115 years in prison is he going to get that much time I doubt it although the founder of FTX will be sentenced on March 28th 2024 so we'll have to wait and see at least for the moment he's going to remain incarcerated in Brooklyn New York at the Metropolitan Detention Center Sam bankman freed was seen as the most responsible man in crypto his exchange FTX was a sure bet extremely safe he was even poised to start writing the rule book for crypto regulation he testified before Congress multiple times had close connections to lawmakers in part thanks to $100 million in political donations but now he's one of the most famous criminals of the 2020s and with that that is where we stand on the Sam bankman freak case so thanks for watching feel free to check out the previous episode on this all right I'll see you again soon for the next episode cheers guys have a good [Music] one cold fusion it's new thinking

Channel: ColdFusion

Views: 665,765

Keywords: Coldfusion, TV, Dagogo, Altraide, Technology, Apple, Google, Samsung, Facebook, Tesla

Id: 8uhidHKAX4M

Length: 11min 28sec (688 seconds)

Published: Sat Nov 04 2023