FTX founder Sam Bankman-Fried thought rules did not apply to him, prosecutor says

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[1/2]Former FTX Chief Executive Sam Bankman-Fried, who faces fraud charges over the collapse of the bankrupt cryptocurrency exchange, walks outside the Manhattan federal court in New York City, U.S. March 30, 2023. REUTERS/Amanda Perobelli Acquire Licensing Rights

NEW YORK, Nov 2 (Reuters) - FTX founder Sam Bankman-Fried thought he could get away with stealing billions of dollars from the cryptocurrency exchange's customers and that the "rules did not apply to him," a prosecutor told jurors on Thursday as the fraud trial drew to a close.

The 12-member jury is set to begin its deliberations on Thursday afternoon, meaning Bankman-Fried is poised to learn his fate nearly a year after FTX declared bankruptcy as its customers raced to withdraw their funds, obliterating his fortune, once estimated by Forbes at $26 billion.

During the monthlong trial in Manhattan federal court, prosecutors argued that Bankman-Fried, 31, stole $8 billion out of simple greed in one of the biggest financial frauds in U.S. history. They contended that Bankman-Fried looted customer funds to prop up his crypto-focused Alameda Research hedge fund, make speculative venture investments and donate more than $100 million to U.S. political campaigns in a push to influence cryptocurrency regulation.

The prosecution said he directed other executives to tweak FTX's computer code to allow Alameda to siphon funds, and that the hedge fund then lent the money to Bankman-Fried and other executives to spend as they wish. Bankman-Fried also directed others to falsify financial statements, prosecutors said.

In a rebuttal to the defense's closing argument, prosecutor Danielle Sassoon urged jurors on Thursday to reject Bankman-Fried's contention that three former members of his inner circle, who pleaded guilty to fraud and testified against him, were falsely implicating him in a bid to win leniency at sentencing.

"He was the one with the plan, the motive and the greed to raid FTX customer deposits - billions and billions of dollars - to give himself money, power, influence," Sassoon said. "He thought the rules did not apply to him. He thought that he could get away with it."

Bankman-Fried has pleaded not guilty to two counts of fraud and five counts of conspiracy. Testifying in his own defense, Bankman-Fried acknowledged that he made mistakes that hurt customers while running FTX, such as not hiring a chief risk officer, but never intended to commit fraud.

"Business decisions made in good faith are not grounds to convict," defense lawyer Mark Cohen said in his closing argument to the jury on Wednesday. "Poor risk management is not a crime. ... Bad business judgments are not a crime."

Sassoon on Thursday likened that argument to someone robbing a jewelry store and justifying their actions by saying there was no security guard.

"That's not a defense. That was a strategy," Sassoon said. "The defendant knew what he was doing was wrong, and that's why he never hired a risk officer."

Bankman-Fried could face decades in prison if convicted, though his sentence would be determined at later date by U.S. District Judge Lewis Kaplan based on a range of factors.

Reporting by Luc Cohen in New York; Editing by Will Dunham

Our Standards: The Thomson Reuters Trust Principles.

Reports on the New York federal courts. Previously worked as a correspondent in Venezuela and Argentina.

Jody Godoy reports on banking and securities law. Reach her at [email protected]

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