He committed one of the biggest financial frauds in American history – by using FTX customer deposits to prop up risky investments in fledgling hedge fund Alameda, which was run with his ex-girlfriend Caroline Ellison.
The 31-year-old billionaire was convicted of two counts of fraud and five counts of conspiracy. He now faces a prison sentence of up to 110 years.
His parents, longtime Stanford Law School professors Joe Bankman and Barbara Fried, stood by him despite the allegations and were a constant presence during the high-profile trial which began on October 4.
It emerged Bankman-Fried gifted them cash, a home in the Bahamas and a $200,000 salary job with his company. While they helped put up his $250million bail, paid his security and legal fees and allowed him to live in their home near campus while under house arrest.
Bankman-Fried’s parents arriving at Manhattan Federal Court on Wednesday to support their son
Bankman-Fried’s FTX was worth $32billion before its collapse in November last year and he was lauded as the future of finance, crypto’s Steve Jobs.
But as prosecutors argued in court, he ‘lied to the world’ because in reality he was simply stealing FTX customers’ money.
The ‘house of cards’ came crashing down last year amid tumbling crypto prices and media reports raising questions about how much of the $32billion valuation was based on FTT, FTX’s own crypto token.
As customers tried to withdraw their money it created the crypto equivalent of a run on a bank, and FTX shut down.
Bankman-Fried gave his parents Joe and Barbara $10million as well as a luxury apartment in the Bahamas worth $16.4million.
His father even quit his job at Stanford and went to work for FTX for a salary of $200,000.
But Joe is said to have complained that this was a fraction of the $1million he was expecting, according to court documents.
The Stanford University law professor moaned that he was being paid around $16,500 a month, when he anticipated $80,000.
He took his gripe to his son, before looping in his mother and telling him: ‘Gee Sam, I don’t know what to say here.
‘This is the first [I] have heard of the 200K a year salary! Putting Barbara on this.’
Although Barbara ‘never had a formal position at the FTX Group’.
Weeks later, the couple were gifted $10million by Alameda Research, FTX’s sister hedge fund, also founded by their son, according to the suit.
While within three months they were handed the deed to a $16.4million home in the Bahamas.
Joe and Barbara have been sued by the bankruptcy lawyers overseeing the winding up of the company to claw back monies paid to them.
FTX founder Sam Bankman-Fried sworn in as he testifies in his fraud trial on October 27
Bankman-Fried hangs his head in this court sketch after he is handcuffed and taken into custody in August
Prosecutor Nicolas Roos used his closing arguments to tell the jury that the 31-year-old billionaire ‘thought he was smarter and better’ and could get away with taking people’s money
Lawyers claim that Joe used fellow Stanford University Law Professor Barbara to ‘lobby’ their son to increase their salaries.
Barbara is also accused of helping her son ‘avoid if not violate federal campaign finance disclosure rules’ around his political donations.
The couple have further been accused of helping cover up complaints from the crypto exchange’s former attorney.
Meanwhile Joe allegedly siphoned $5.5million in donations to Stanford University in order to ‘curry favor’ with his employer, whilst ‘showering’ his family and friends with gifts.
The prestigious university announced in September that it would return the funds of all gifts collected from FTX and related companies.
A range of fraud and money laundering charges were brought against Bankman-Fried in December and his parents are said to have worked to find a way to pay his security and legal fees ahead of the trial.
They also reportedly bought him a German Shepherd puppy to cheer him up.
The money for his expensive legal defense came from the ‘multi-million-dollar gift’ he gave to his parents, according to Forbes.
He was released on a $250million bond in December thanks to help from his parents who largely secured it against their property in Palo Alto, California.
Stanford scholars Larry Kramer, a former dean of Stanford’s law school, and Andreas Paepcke, a Stanford computer scientist, each signed on as guarantors worth $500,000 and $200,000 too.
Bankman-Fried was under house arrest at his parents property located near the Stanford University campus.
Prosecutor Roos accused Bankman-Fried of ‘celebrity chasing’, showing jurors the famous picture of him at the 2022 Super Bowl with singer Katy Perry (left) and Orlando Bloom (second from left)
But US District Judge Lewis Kaplant revoked his bail in August after finding that the former billionaire likely tampered with witnesses at least twice.
His parents continued to turn up to almost every court hearing as they demonstrated their support.
Joe and Barbara are in the middle of a civil case against FTX’s current management who have accused them of using company funds to enrich themselves and are trying to claw back the money paid to them.
But the couple are not facing criminal charges.
More than $7billion of the money stolen by FTX has now been recovered but those who lost out will not get it all back due to changes in the value of cryptocurrency between now and last November.
Source: | This article originally belongs to Dailymail.co.uk
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