A federal jury convicted FTX founder Sam Bankman-Fried on seven counts of fraud and conspiracy related to the collapse of the cryptocurrency company.
The charges carry a maximum prison term of 110 years, according to federal prosecutors. The jury verdict Thursday came after a trial of a little over a month in federal court in New York City. The U.S. government alleged that Bankman-Fried, 31, had cheated investors and customers out of upwards of $10 billion through FTX and his crytpo trading firm Alameda Research.
The case has attracted widespread public interest — as well as attention in Hollywood. Bankman-Fried’s spectacular fall has already spurred multiple documentaries and is widely expected to be fodder for a future movie or TV series. Amazon was quick to put an FTX limited series project in development last year from the Russo brothers Amazon-based AGBO Studios and writer David Weil, creator of “Hunters.”
According to prosecutors, Bankman-Fried, known as “SBF,” perpetrated a “wide-ranging scheme… to misappropriate billions of dollars of customer funds deposited with FTX” and to “mislead investors and lenders” to FTX and Alameda Research. During the trial, Bankman-Fried took the stand over the course of four days, testifying that he never committed fraud and never intended to defraud FTX’s customers.
Bankman-Fried’s sentencing hearing has been set for March 28, 2024.
Following the jury’s verdict, U.S. Attorney Damian Williams of the Southern District of New York said in a statement, “Sam Bankman-Fried perpetrated one of the biggest financial frauds in American history — a multibillion-dollar scheme designed to make him the King of Crypto — but while the cryptocurrency industry might be new and the players like Sam Bankman-Fried might be new, this kind of corruption is as old as time. This case has always been about lying, cheating, and stealing, and we have no patience for it.”
FTX’s collapsed came after crypto news and data site CoinDesk in November 2022 published an article citing what it said was a balance sheet for Alameda Research showing much of its assets were in token issued by sister company FTX — causing a run on FTX’s assets.
In December 2022, Bankman-Fried was arrested in the Bahamas and extradited to the U.S., where he was released on a $250 million bond with electronic monitoring and a requirement that he remain at his parents’ residence in Palo Alto, Calif.
In the Nov. 2 jury verdict, Bankman-Fried was convicted of two counts of wire fraud conspiracy, two counts of wire fraud and one count of conspiracy to commit money laundering, each of which carries a maximum sentence of 20 years in prison. He also was convicted of conspiracy to commit commodities fraud and conspiracy to commit securities fraud, each of which carries a maximum prison sentence of five years.
After the launch of FTX in 2019, Bankman-Fried was the toast of global financial circles, appearing on the cover of Forbes and Fortune and in many other prominent outlets. He was believed to have a net worth of upwards of $30 billion at his peak. He was celebrated as a visionary with a furry thicket of messy hair and a fondness for ratty T-shirts and cargo shorts as his standard uniform. The former coworkers who testified against Bankman-Fried included Caroline Ellison, his periodic girlfriend who was previously CEO of Alameda Research.
Bankman-Fried’s defense team sought to position their client as an bold entrepreneur who made significant mistakes as a result of inexperience but that none of his actions crossed the line into fraud. The jury didn’t buy it, given that so many witnesses testified about Bankman-Fried being in charge and directing key events. The trial included detailed testimony from Gary Wang, a fellow co-founder of FTX and Bankman-Fried’s longtime friend, about how a covert bit of digital code was embedded into FTX’s platform that allowed Alameda to rack up losses and tap into customer funds without that activity being evident to other users.
Investors in FTX had included Endeavor’s IMG sports division, NFL quarterback Tom Brady and New England Patriots owner Robert Kraft, according to bankruptcy court documents. Major FTX shareholders included Dan Loeb’s Third Point, Paradigm, Sequoia Capital, Thoma Bravo, Softbank, New Enterprise Associates (NEA), Temasek, Tiger Global Management and Coinbase, a crypto exchange competitor to FTX.
Following the FTX collapse and bankruptcy filing, celebrity spokespeople enlisted by the company — including Larry David, Tom Brady, Gisele Bündchen, Shaquille O’Neal and Stephen Curry — were named in a proposed class-action lawsuit accusing FTX and the “brand ambassadors” of deceptively encouraging consumers to invest in the crypto exchange.
Cynthia Littleton contributed to this story.
