The Journal. - The Trial of Crypto’s Golden Boy: Guilty On All Counts

Episode Date: November 3, 2023

A jury convicted FTX founder Sam Bankman-Fried of stealing billions of dollars from customers and lenders, in what prosecutors called one of the biggest financial frauds in U.S. history. Rachel Humphreys and Caitlin Ostroff were inside the courtroom for the verdict.  Further Reading: - What’s Happening Today at the Sam Bankman-Fried Trial  Further Listening:  - The Trial of Crypto’s Golden Boy  Learn more about your ad choices. Visit megaphone.fm/adchoices

It is 9pm on Thursday, November 2nd, and we are stood outside the Southern District of New York Courthouse, surrounded by press, TV crews, cameras, because, Caitlin, we got a verdict tonight. We got a verdict tonight. We couldn't believe we already had a verdict. We were sitting there, best held. And then the foreperson, jury number four, stood up and read out the verdict.

Guilty on all counts. And it was just such a shocking moment in the room. First of all, it was happening so quickly. And then to hear that Sam Backman-Fried was guilty on seven counts. Yeah. And we were sitting behind Bankman-Fried's parents who were in shock and dismay. His dad was doubled over with his head down.

His mother was putting her hands on the side of her face, looking down. They were anguished. Yeah, and after the jury had delivered their results, each juror, each of the 12 jurors was asked one by one, do you agree with this verdict? And each one said yes, one after the other, didn't they? It was honestly so surreal just listening to them all go, yes, yes, all guilty. Especially after weeks of complex evidence.

We have sat through this trial for around five weeks now, and we have gone through reams of evidence. And it's a damning, damning verdict for Sam Bankman-Fried, who had his head down while the sentence was being read out. And as he left the court, he turned around, glanced at his parents and smiled. And we have a statement, don't we, this evening from his lawyer, Mark Cohen. Yeah, since we've gotten out of court, there was a statement waiting for us. Mark Cohen, Bankman-Fried's attorney, don't we, this evening from his lawyer, Mark Cohen. Yeah, since we've gotten out of court, there was a statement waiting for us. Mark Cohen, Bankman Freed's attorney, said, quote, We respect the jury's decision, but we are very disappointed with the result.

Mr. Bankman Freed maintains his innocence and will continue to vigorously fight the charges against him. From the Journal, this is the trial of crypto's golden boy. I'm Caitlin Ostroff. And I'm Rachel Humphries. Coming up, we have a verdict. I'm going to go. in Ontario. The hero of your own night. Unapologetically full-flavored cocktails with a 13% punch. Seagram 13. Dare to make your own luck.

Must be legal drinking age. Please enjoy responsibly. Available at the LCBO. Okay, we've raced back from court, Caitlin, as fast as we can into the studio after what has turned out to be, oh my goodness, the last and final day in the trial of Sam Bankman-Fried. If you told me that this morning, I wouldn't have believed you.

It's been a whirlwind few hours, but it didn't start that way today. It started very calmly. No, it started off with us thinking it would be a fairly dull day. I might have evening plans, you know. Never, never in this case. Because before handing the case to the jury, Judge Lewis Kaplan went through all of the charges against Bankman Freed, and it took him a while to get through explaining all of those to the jury.

Close to four hours. Yeah, and although he did throw in a few funny one-liners, as is characteristic of Judge Kaplan, to try and liven things up, but it was pretty dry. But let's go through those charges, if you can, Caitlin, more quickly than Kaplan did. So the main charges had to do with wire fraud. And that's basically committing fraud

using electronic communications. Think email or phone calls. The first few charges with wire fraud. And that's basically committing fraud using electronic communications, think email or phone calls. The first few charges are wire fraud and conspiracy to commit wire fraud on FTX customers. And that's in reference to the customer funds that were taken and funneled to Alameda Research. The next few charges are similar. They're wire fraud and conspiracy to commit wire fraud, but this time on Alameda's lenders. And that has to do with the spreadsheets we've previously discussed that Caroline Ellison testified Alameda sent to lenders that made them seem more financially stable than they actually were. And so that counts three and four. And the other three charges are conspiracy charges,

and they vary a little bit. Conspiracy to commit securities fraud, commodities fraud, and money laundering. And they started deliberating. And that was around 3.15 on Thursday afternoon. And we didn't quite know how it was going to go. I mean, for the past few days, the judge has been reminding the jury regularly that they could stay late if they needed to on Thursday. And he did everything to make this an appealing option. He offered them a government pizza party,

basically said, we'll give you pizza, which I noticed the jury sort of perked up a little bit when they knew these perks were being offered, and also some cars home. Yeah, he made a little joke of it where he was just like, even if you think you might stay, order the pizza, the government can afford it. And some juries take a few hours to reach a verdict. Others can take days. And this was a complicated trial with long jury instructions. And so, Rachel, you and I honestly thought we'd be back next week for a verdict. Yeah, I really, really did. So at that point, I actually went to pick my shoes up from the cobbler around the corner because I thought

we really had time on our side and then got back to the courthouse and the many press that were waiting. Well, we had a pizza party of our own, didn't we? Yeah, we found out from the jury that they would be sitting through 8 p.m., is what we were told. And so we decided to organize our own pizza party. And we discovered one last feature of the Courthouse Cafe, which is the gift that keeps on giving, which is that you can order a whole pizza from it.

And so the press got together. We love lists. We had a list of everyone who's going to be staying and we ordered a couple of pizzas, the same pizzas the jury got from the cafeteria. And then we all went back to the courtroom, you know, after weeks of competing to get a spot in the courtroom, we've talked before about the few places available. We were all just allowed to go in there and we waited as we, as we were just told to do. And as we were waiting, we were trying to keep track of the notes that the jury were passing out from the jury room.

And we're trying to decipher what was going on through those notes because they can basically send notes to the judge with questions or asking for instructions. Right. And pretty soon after we finished the dinner hour, which ended at seven, the judge came into the courtroom and read off a couple of notes that he had gotten from the jury. And what happens is that all of the lawyers come back into the courtroom, as does Bankman Freed and his defense attorneys. And we were all just kind of on the edge of our seats because we don't know what the note says. And so we're already thinking, could this be a verdict? the edge of our seats because we don't know what the note says. And so we're already thinking, could this be a verdict? And the judge read it and they wanted highlighters and some post-it notes.

It was a bit of an anticlimax, to be said. And so all of our adrenaline levels dropped a little bit. But they also asked to see some testimony from two of the witnesses who were investors in FTX. And so we were thinking that they were probably up to about the fifth charge against Bankman Freed, which was a conspiracy to commit securities fraud charge. And so it looked like they had gotten through most of the charges, but we were still thinking, you know, it was almost eight o'clock. The jury probably had some questions they needed to resolve. And again, we still foolishly did not think that there would be a verdict immediately. Yeah, I was talking to people in the courtroom, you know, some who've been court reporters for

many years or who have been in many trials, and they all said, there's no way there'll be a verdict tonight. You know, the charges that Judge Kaplan read out today, they took hours. It's going to take them a while. But it seemed that, you know, those few questions that they asked were the only ones. And the jury resolved those questions pretty fast because around 7.37 p.m., the jury sent another note to Judge Kaplan saying, basically, we've got it. We've made a decision. And when that was read out in the courtroom, there was just this gasp. I mean, everyone was so shocked and everyone just started rushing around trying to get in their seats. All these lawyers started to flood into the courtroom. Suddenly, you know, the room became alive.

The courthouse was pretty dark. You know, it's closed for the day by this point, but all these people appeared and everyone was squeezing into the gallery. Bankman Freed's parents were there. I mean, it was just packed. Yeah, usually they kind of have their own row for them and being a spokesman. And this time they were just wedged in next to reporters. There was no delineation as to who was who. I looked at you, you looked pretty shocked. I was in such shock that we had already gotten the verdict. The adrenaline came back. And then the jury walked in and we were told the person who would speak for them was juror number four, the four person. And everyone was staring at her in anticipation.

And she stood up and she handed a sheet with the charges and their verdict to the judge. And we were actually given copies of the verdict form, which the jury had to fill out. And it listed each of the seven charges with a space to check guilty or not guilty under each one. And then this dramatic moment came when the judge asked Bankman-Fried, who was in his usual seat in the courtroom, to stand up and face the jury. And juror number four, the four-person, was also stood up now with the charge sheet back in her hand.

And the deputy clerk read out the charges and the foreperson answered. Count one, wire fraud on FTX customers. Guilty. Count two, conspiracy to commit wire fraud on FTX customers. Guilty. Count three, wire fraud lenders to Alameda Research. Guilty. Guilty. Guilty.

Guilty. Guilty. Guilty. Count seven, conspiracy to commit money laundering. Guilty. And through all of that, Bankman Freed looked down. Yeah, it was a really kind of, I mean, it was just silence in the courtroom. And the judge just missed everyone, and we ran for the exit. Yeah, everyone rushed out of the courtroom.

You know, we all ran to the elevators, and the press were all trying to cram in to get downstairs so they could get a chance to see the lawyers outside the front of the courthouse, where already cameras were set up, waiting, microphones were waiting. And as I got to the front of the courthouse, I rushed towards Bankman-Fried's lawyers as they came out of court, heads slightly bowed, and they were with Sam Bankman-Fried's spokesman, Mark Boknik,

and he was dodging reporters. What's Sam's room like? What are you hoping for at sentencing? Got nothing, guys. What are you hoping for at sentencing? Got nothing, guys. What are you hoping for at sentencing? What is your plan for the appeal? And of course, the government was happy. Prosecutors came down to the front of the courthouse

and stood in a line behind U.S. Attorney Damian Williams. And he told the press that Bankman Freed had perpetrated one of the biggest financial frauds in American history. It's a warning, this case, to every single fraudster out there who thinks that they're untouchable. Or that their crimes are too complex

for us to catch. Or that they're too powerful for us to prosecute. Or that they could try to talk their way out of it when they get 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. Caitlin, wow, I almost don't know what to say at this point. I mean, it's just been the sleep deprivation doesn't help. Yeah, such an intense few hours.

But you've been reporting on Sam Bankman-Fried and this story for so long. What are you thinking on? What are you reflecting on right now? It's funny. It's been a year of reporting on this collapse. And there's still so much to unpack. But what's really uncanny and almost darkly poetic is that it was exactly one year ago, November 2nd,

that Coindesk published the article showing the financial relationship between FTX and Alameda Research. And that was the article that really started this whole cascade that within a week and a half brought FTX, Alameda Research and Bankman's lead down. Yeah. And it's just incredible, really, that it's taken just a year from that article for us to come to this moment today. But as you said, crypto moves in dog years. Everything is different in crypto.

But this story is far from over. I mean, this is not the end. There's still sentencing for Bankman Freed. He has another trial. And we have FTX's bankruptcy proceedings ongoing. Right. We're not quite finished. And we're not finished explaining all this to you guys. We need a little bit of sleep,

but we're going to be back next week to explain more. That's all for today, Friday, November 3rd. The Trial of Crypto's Golden Boy is part of The Journal, which is a co-production of Spotify and The Wall Street Journal. I'm Caitlin Ostroff. And I'm Rachel Humphries. Thanks for listening. Check back for more updates next week.