On Thursday, FTX founder Sam Bankman-Fried was found guilty of financial fraud, solidifying his fall from grace in the cryptocurrency world. A 12-member jury in Manhattan federal court convicted Bankman-Fried on all seven counts he faced, following a month-long trial in which prosecutors argued that he had greedily siphoned off $8 billion from the exchange’s users, making it one of the most significant financial fraud cases on record.
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The verdict comes almost one year after FTX filed for bankruptcy, causing a swift corporate meltdown that shocked financial markets and wiped out Bankman-Fried’s estimated $26 billion personal fortune. Standing before the jury with his hands clasped, Bankman-Fried, who had pleaded not guilty to two counts of fraud and five counts of conspiracy, heard the verdict. The quick decision by the jury, reached after just over four hours of deliberation, was a win for the US Justice Department and Damian Williams, the top federal prosecutor in Manhattan.
Williams, who has made rooting out corruption in financial markets a top priority, stated, “The crypto industry might be new, the players like Sam Bankman-Fried may be new, but this kind of fraud is as old as time, and we have no patience for it.”
Once considered the darling of the cryptocurrency world, Bankman-Fried, known for his casual attire and untamed curly hair, joins the ranks of other notable figures convicted of major US financial crimes, including admitted Ponzi schemer Bernie Madoff and Wolf of Wall Street fraudster Jordan Belfort.
US District Judge Lewis Kaplan set Bankman-Fried’s sentencing for March 28, 2024, and he could potentially face decades in prison. Bankman-Fried’s defense attorney, Mark Cohen, expressed his disappointment with the verdict but stated that he respected the jury’s decision. He added, “Mr. Bankman-Fried maintains his innocence and will continue to vigorously fight the charges against him.”
As Bankman-Fried was led away by US Marshals, he nodded at his parents, who were seated in the courtroom’s front row. They both work as professors at Stanford Law School.
Bankman-Fried is scheduled to go on trial in March on a second set of charges brought by prosecutors, including alleged foreign bribery and bank fraud conspiracies. His trial was the first of several high-profile cases brought against former cryptocurrency executives by Damian Williams, who initiated these legal actions against executives of high-flying crypto companies. Several crypto firms went bankrupt last year as the prices of digital assets like Bitcoin collapsed following a prolonged boom.
During the trial, prosecutors argued that Bankman-Fried had funnelled funds from FTX to his crypto-focused hedge fund, Alameda Research, despite publicly stating that customer fund safety was a top priority for the exchange. Alameda used the money to pay its lenders and provide loans to Bankman-Fried and other executives, who made speculative venture investments and contributed more than $100 million to US political campaigns in support of cryptocurrency-friendly legislation.
Bankman-Fried took the calculated risk of testifying in his own defense during the trial, acknowledging his mistakes in running FTX but denying stealing customer funds. He argued that he believed Alameda’s borrowing from FTX was permitted and claimed that he had been unaware of the extent of its debts until shortly before both companies collapsed.
Prosecutors presented a different perspective, stating that Bankman-Fried was the one with the plan, motive, and greed to embezzle FTX customer deposits, ignoring the rules, and thinking he could get away with it.
