Sam Bankman-Fried, the founder and former CEO of the failed cryptocurrency exchange FTX, was found guilty on all counts by a federal jury in New York on Thursday. The verdict came after roughly four hours of jury deliberations following a long trial.
Bankman-Fried faced seven criminal charges related to fraud and conspiracy in the collapse of FTX, his global crypto exchange that filed for bankruptcy in November 2022. He was found guilty on all charges:
- Two counts of wire fraud
- Two counts of wire fraud conspiracy
- One count of securities fraud
- One count of commodities fraud conspiracy
- One count of a money laundering conspiracy
The 30-year-old now faces up to 115 years in prison when he is sentenced on March 28, 2024, though the exact length will be determined by the judge. Prosecutors are expected to recommend a lengthy sentence.
In a statement, Bankman-Fried’s attorney, Mark Cohen, said they respect the jury’s decision but are disappointed and maintain his innocence. An appeal of the verdict appears likely.
Fraud Verdict Caps Stunning Downfall
The guilty verdict caps a meteoric rise and fall for Bankman-Fried, who was once worth nearly $32 billion and considered a star of the crypto industry. Along with the fraud charges, he was accused of stealing billions in FTX customer funds to plug losses at his hedge fund, Alameda Research.
Outside the courthouse, lead prosecutor Damian Williams called it “one of the biggest financial frauds in American history,” enabled by new technology. But he said the crimes committed are ancient in concept.
In the trial, prosecutors painted Bankman-Fried as knowingly deceiving investors and customers while misusing their money on political donations, celebrity sponsorships, real estate, and other ventures.
Bankman-Fried claimed shoddy risk management and inattention allowed Alameda to secretly borrow customer funds but denied intentional fraud. He blamed the collapse on “a few extreme things coming together at once.”
Other key figures, like FTX co-founder Gary Wang and Alameda CEO Caroline Ellison, pleaded guilty and testified against Bankman-Fried as part of deals with prosecutors.
Jury Unconvinced by SBF Defense
On the witness stand, Bankman-Fried struck a contrite tone and acknowledged oversight failures but steadfastly maintained he did not mean to commit crimes.
However, jurors ultimately sided with the prosecution in finding him guilty of all charges. The guilty verdict indicates the jury believed Bankman-Fried knowingly deceived investors and misused customer funds, despite his claims to the contrary.
Some of the most damning evidence presented by the prosecution included messages showing Bankman-Fried and his associates discussing the secret use of customer funds.
The jury’s decisive guilty verdict on every count suggests they found Bankman-Fried’s testimony and defense unconvincing in the face of documented evidence.
Implications of Conviction
The unequivocal guilty verdict has broad implications for crypto markets and potentially for Bankman-Fried himself.
- He now likely faces a lengthy prison sentence when sentenced next year.
- The verdict burnishes prosecutors’ white collar crime credentials in complex crypto cases.
- Other crypto cases may now be more inclined to settle instead of risk trial.
- Regulators globally may feel emboldened to pursue tougher oversight of crypto.
- Prosecution of further FTX figures is still possible, depending on cooperation.
- Bankman-Fried’s bail was revoked, and he was jailed post-verdict.
While an appeal is expected, Bankman-Fried currently awaits sentencing while in federal custody. The decisive conviction against such a major industry figure underscores that crypto prominence offers no protection from fraud accountability.
For crypto markets, the verdict may exacerbate existing skittishness among investors around security and appropriate conduct. However, it also removes the uncertainty that hung over the industry during the trial.
Overall, the unanimous guilty verdict demonstrates regulators’ willingness to aggressively pursue crypto improprieties rather than adopt a hands-off approach. That could spur wider calls for reform from policymakers.
Bankman-Fried’s stunning downfall offers a cautionary tale of the consequences awaiting those who violate the public’s trust at the intersection of finance and technology.