Bankman-Fried guilty of fraud in crypto scheme
Counts carry a max sentence of 110 years
NEW YORK — Sam Bankman-Fried, the tousle-haired mogul who founded the FTX cryptocurrency exchange, was convicted Thursday of seven charges of fraud and conspiracy after a monthlong trial that laid bare the rampant hubris and risk-taking across the crypto industry.
Bankman-Fried became a symbol of crypto’s excesses last year when FTX collapsed and he was charged with stealing as much as $10 billion from customers to finance political contributions, venture capital investments, and other extravagant spending. A jury of nine women and three men took just over four hours of deliberation Thursday to reach a verdict, convicting Bankman-Fried of wire fraud, conspiracy, and money laundering.
Together the counts carry a maximum sentence of 110 years. Bankman-Fried, 31, is expected to appeal. He’s scheduled to be sentenced March 28.
The verdict capped one of the fastest and most spectacular falls from grace in modern corporate history. Just a year ago, Bankman-Fried was worth more than $20 billion and hailed as a rare good guy in the freewheeling crypto industry, his face plastered on billboards and magazine covers. FTX, valued at $32 billion at its peak, was one of the world’s biggest marketplaces for people to buy and sell digital coins like bitcoin and ether.
Crypto enthusiasts, many of whom openly rooted for Bankman-Fried to be found guilty, had said they hoped his conviction would provide a moment of catharsis that would allow the industry to move on from a scandal-plagued year. But critics cast the verdict as a sign that the industry may face more legal consequences as it struggles to regain public trust.
“Perpetrators of scams will have to face the law and suffer the consequences of their crimes, even in crypto,” said Cory Klippsten, founder of the Swan Bitcoin financial services firm and a frequent critic of the industry. “The ‘Wild West’ days are over.”
The swift verdict reflected the overwhelming evidence that prosecutors marshaled against Bankman-Fried, including millions of pages of internal messages, spreadsheets, and memos.
“These guilty verdicts must have been easy decisions for the jurors based on how quickly they returned them,” said John Fishwick, a former US attorney for the Western District of Virginia.
Bankman-Fried was always expected to face an uphill battle in court. After FTX imploded, three of his top deputies pleaded guilty to fraud and agreed to cooperate with prosecutors in return for leniency. During the trial, they testified that Bankman-Fried had repeatedly directed them to lie to the public and route billions of dollars in customer money from FTX to its sister trading firm, Alameda Research.
Bankman-Fried’s lawyers argued that he had operated his businesses in good faith and never intended to break the law. But they struggled to poke significant holes in the cooperators’ stories, interrupted by wave after wave of government objections. When Bankman-Fried took the stand to defend himself, he often seemed flustered, claiming numerous times that he couldn’t remember potentially incriminating conversations.
Bankman-Fried’s business empire collapsed over a matter of days last November, when a run on deposits exposed an $8 billion hole in FTX’s accounts. FTX soon filed for bankruptcy, and Bankman-Fried stepped down as chief executive. In December, he was arrested at his home in the Bahamas, where FTX had its headquarters.
Bankman-Fried tried to dismiss FTX’s collapse as the unfortunate result of a monumental accounting error, rather than a deliberate fraud. But at his trial, prosecutors argued that he had repeatedly lied to customers, lenders, and investors, using their funds to build himself up into a crypto titan.