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Sam Bankman-Fried Guilty On All 7 Counts Of Fraud In FTX Trial
The verdict is in. The 12-member New York jury for Sam Bankman-Fried’s criminal trial has come to a unanimous decision finding the FTX founder guilty of seven fraud and conspiracy charges on Thursday.
U.S. Attorney Damian Williams stated,
“Sam Bankan-Fried perpetrated one of the biggest financial frauds in American history. This kind of fraud, this kind of corruption is as old as time. We have no patience for it.”
An appeal seems likely. In a statement, defense attorney Mark Cohen said Bankman-Fried respects the jury’s decision but maintains his innocence and will continue to “vigorously fight the charges.”
Jurors began deliberating a little after 3 p.m. ET. Just before 7:40pm, the judge said they had reached a verdict. The attorneys and Bankman-Fried returned to the courtroom and the guilty verdict was read out shortly thereafter to the packed courtroom.
Bankman-Fried kept still when the verdict was read. He’d been instructed by the judge to look toward the jury box, and jurors were told to look toward the court clerk and judge.
“The verdict unanimous, your honor,” was the message from the 12 New Yorkers who voted guilty on all seven counts. The judge thanked the jurors for their service.
The jury reached the guilty verdicts on the first anniversary, coincidentally, of the award-winning CoinDesk article that spurred the former crypto mogul’s downfall.
As the foreperson read the guilty verdicts, Joseph Bankman, the defendant’s father, buried his head into his lap from a seat in the viewing gallery.
His mother, Barbara Fried, kept still, back straight, with a kind of sullen expressionlessness – staring straight ahead.
31 year-old Bankman-Fried was arrested last December and tried on allegations of defrauding FTX investors and customers, and Alameda Research’s lenders.
The once-prominent crypto exchange CEO pleaded not guilty to all charges, and went to trial at the beginning of October. Federal prosecutors sought to paint him as someone who deliberately set out to steal his customers’ funds – around $8 billion – for use in a variety of purchases and investments, including real estate, sports sponsorships and venture investments.
His defense team argued that Bankman-Fried was an overworked businessman who made the mistake of assuming the company funds he used belonged to those companies, rather than their customers or investors.
Bankman-Fried acknowledged “there were significant oversights,” but said on the stand he did not defraud anyone or set out to take their funds.
FTX collapsed nearly a year ago, after it was reported that Alameda held a massive amount of FTX’s exchange token, FTT, a revelation which, combined with a tweet from Binance CEO Changpeng Zhao, sparked what Bankman-Fried described as a “run on FTX” – ultimately leading to FTX, Alameda and the companies’ various subsidiaries filing for bankruptcy.
Key FTX and Alameda executives pleaded guilty to various charges and testified against Bankman Fried during the trial, saying that they had taken direction from the MIT grad who co-founded the companies. A number of other former employees similarly testified that Bankman-Fried set the direction for FTX’s operations.
Bankman-Fried, however, argued that he trusted his handpicked lieutenants to safely operate the companies while he was busy with his own roles as the head of the multibillion-dollar empire, including acting as the public face of FTX and lobbying regulators and lawmakers.
Bankman-Fried was charged with wire fraud and conspiracy to commit wire fraud against FTX’s customers, wire fraud and conspiracy to commit wire fraud against Alameda’s lenders, conspiracy to commit securities fraud against FTX’s investors, conspiracy to commit commodities fraud against FTX’s customers and conspiracy to commit money laundering.
If he gets the maximum sentence for these charges, Sam Bankman-Fried faces 115 years in prison.
PayPal Faces SEC Action Related To PYUSD Stablecoin
The enforcement division of the SEC has reportedly sent payments giant PayPal a subpoena requesting the firm to produce certain documents relating to its PYUSD stablecoin. This information was disclosed by the firm in its recent quarterly filing with the SEC.
The filing reads,
“On November 1, 2023, we received a subpoena from the U.S. SEC Division of Enforcement relating to PayPal USD stablecoin. The subpoena requests the production of documents. We are cooperating with the SEC in the connection with this request.”
The action comes about three months after PayPal launched the PYUSD stablecoin in early August. The stablecoin is issued by Paxos Trust and backed by U.S. dollar deposits, short-term treasurys and similar cash equivalents. PYUSD is based on the Ethereum blockchain and is aimed at handling digital payments and Web3.
According to a spokesperson for Paxos, PYUSD has seen a successful rollout so far, reaching a $150 million market capitalization in the two months since its launch. At the time of writing, the market cap of PYUSD is valued at about $159 million, with almost $2.7 million in daily trading volume, according to data from CoinGecko.
The sharp rise in the adoption of PayPal USD came amid major exchanges like Coinbase, Crypto.com, Bitstamp and Kraken listing the stablecoin on their platforms soon after its launch.
In September PayPal announced the upcoming integration of the PYUSD stablecoin into the Venmo mobile payment service, allowing users to purchase PYUSD and send it to friends and family.
The latest SEC action against PayPal is more evidence that the U.S. is a difficult environment for crypto companies. The regulator has sued several of the largest local companies in the crypto industry, including its ongoing lawsuit against Coinbase exchange.
In October 2023, the SEC finally moved to dismiss its three-year lawsuit against Ripple, the company behind the XRP token, one of the largest cryptocurrencies by market cap.
In April 2023, Circle CEO Jeremy Allaire argued that a cryptocurrency crackdown by U.S. regulators had been a significant factor behind the declining market capitalization of Circle’s USD Coin stablecoin.
Coinbase Beats Q3 Earnings Estimates While Trading Volume Falls
Crypto exchange Coinbase beat analyst estimates after reporting a third-quarter revenue of $674.1 million, a decline of 4.7% from the previous quarter but an increase of 14.2% from the same period last year.
However, the exchange’s reported total Q3 trading volume was just $76 billion, falling short of the estimated $80.1 billion and down from $92 billion in the previous quarter.
Coinbase wrote in a letter to shareholders,
“Q3 was a strong quarter for Coinbase. While we have generated a net loss through Q3, we are on track to deliver meaningful positive Adjusted EBITDA for 2023, reflecting the direction we set at the beginning of the year to be a company that can generate Adjusted EBITDA in all market conditions.”
Looking at the fourth quarter, the company said it generated about $105 million of transaction revenue in October. The crypto exchange further said it expects to “generate meaningful” positive adjusted EBITDA for 2023, a slight revision from the previousl goal of “improving” full-year 2023 adjusted EBITDA.
Shares of Coinbase are down 5.5% in post-market action after rising 8.7% during the regular session. COIN is up about 131% this year, while the price of bitcoin has risen about 110% over the same time period.