A 12-member jury in Manhattan federal court on Thursday found disgraced FTX founder Sam Bankman-Fried guilty on all seven charges of fraud and conspiracy and said he stole up to $8 billion from the customers of his now-bankrupt cryptocurrency exchange.
Now being called one of the biggest financial frauds ever carried out, it brings to an end one of the most dizzying rises in corporate history. Six years ago, Bankman-Fried was almost worth nothing and knew nothing about cryptocurrencies. A year ago, he was worth $26 billion and hobnobbed with the who’s who of the celebrity world and called the “next Warren Buffet”.
The verdict was reached after nearly four hours of deliberations following five weeks of trial in which some of Bankman-Fried’s closest associates testified against him. Sentencing will follow – District Judge Lewis Kaplan set it for March 28 next year – and the 31-year-old Massachusetts Institute of Technology graduate faces up to 110 years in jail.
Among other charges, the son of two Stanford professors was convicted of wire fraud, conspiracy to commit wire fraud, conspiracy to commit securities fraud and conspiracy to commit commodities fraud and conspiracy to commit money laundering.
Bankman-Fried faces allegations of $14bn fraud
A key witness was Caroline Ellison, an on-and-off-again girlfriend of Bankman-Fried, who was later picked as the CEO of his personal hedge fund, Alameda Research. Elison told the jury they had stolen “around $14 billion” from FTX trading platform before it collapsed and used it for Alameda Research.
Ellison and former FTX executives Gary Wang and Nishad Singh, testifies for the prosecution after entering guilty pleas, and told the jury that they were directed into committing the crimes. The associates are yet to be convicted in the case, but are expected to get away with lenient sentences.
Bankman-Fried, who testified in his own defense, admitted he made mistakes, such as not formulating a risk-management team, but did not steal customer funds. He thought Alameda’s borrowing from FTX was allowed.
“We thought that we might be able to build the best product on the market,” Bankman-Fried testified. “It turned out basically the opposite of that.”
Damian Williams, US attorney for the Southern District of New York, said: “Sam Bankman-Fried perpetrated one of the biggest financial frauds in American history. The cryptocurrency industry might be new. The players like Sam Bankman-Fried might be new. But this kind of fraud, this kind of corruption, is as old as time and we have no patience for it.”
Mark Cohen, his defense lawyer, said in a statement that he was “disappointed” but respected the jury’s decision. “Mr Bankman-Fried maintains his innocence and will continue to vigorously fight the charges against him,” he added.
Bankman-Fried is also set to go on trial on a second set of charges brought by prosecutors earlier this year, including for alleged foreign bribery and bank fraud conspiracies.
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