Sam Bankman-Fried Is Convicted of Fraud in FTX Collapse
New York federal jury finds crypto exchange’s founder guilty of stealing billions of dollars from customers
FTX founder Sam Bankman-Fried was convicted Thursday of stealing billions of dollars from customers of the doomed crypto exchange, in what prosecutors called one of the biggest financial frauds in U.S. history.
A New York federal jury convicted him of all seven counts he faced. The verdict capped the stunning fall of the onetime crypto king, whose shaggy-haired, boy-genius persona helped catapult FTX into a powerhouse trading platform that sponsored sports teams and ran glitzy ads featuring football great Tom Brady, model Gisele Bündchen and comedian Larry David.
The crypto exchange abruptly crashed a year ago, with customers losing billions of dollars. Bankman-Fried, 31 years old, was indicted in December 2022 and agreed to leave his home in the Bahamas to face an array of fraud charges. Near the end of the monthlong trial, Bankman-Fried took the risky move of testifying in his own defense.
Jurors, who walked stoically into the courtroom, reached their verdict after just a few hours of deliberations. Bankman-Fried, who stood and faced the jury, cast his head down after the verdict was read. His parents both held their heads in their hands, and his mother cried.
A sentencing date was set for March 28, 2024. He could face a decadeslong prison term.
“We respect the jury’s decision. But we are very disappointed with the result,” said Bankman-Fried lawyer Mark Cohen. “Mr. Bankman-Fried maintains his innocence and will continue to vigorously fight the charges against him.”
Jurors declined to comment on the deliberations as they left the courthouse. One said she was exhausted and ready to put the trial behind her.
For federal prosecutors, the verdict was an expected victory after putting forward what many observers saw as a powerful case that included 18 witnesses.
“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,” said Damian Williams, the U.S. attorney in Manhattan. “This case has always been about lying, cheating and stealing, and we have no patience for it.”
His office had accused Bankman-Fried of being a greedy billionaire who lied to customers, investors and lenders while flying on private jets and hobnobbing with current and former heads of state. Prosecutors presented evidence and testimony showing Bankman-Fried was the architect of a scheme to siphon FTX money to repay the debts of its sister hedge fund, Alameda Research, bankroll risky investments, buy luxury real estate and cover hundreds of millions of dollars in political donations.
His closest former allies took the stand as government witnesses and testified that Bankman-Fried directed them to commit crimes, including secretly changing FTX’s code to allow Alameda to borrow virtually unlimited amounts from the exchange. Caroline Ellison, the government’s star witness and Bankman-Fried’s ex-girlfriend, told jurors that while she was the chief executive officer of Alameda, he instructed her to doctor balance sheets to fool the hedge fund’s lenders. The lying and stealing left her in “a constant state of dread,” she said.
Bankman-Fried’s lawyers argued that he wasn’t the movie villain prosecutors described him as but a math nerd and entrepreneur trying his best to build a business in an emerging industry. “In the real world, unlike the movie world, things can get messy,” Cohen told the jury.
Bankman-Fried’s decision to take the stand appeared perhaps his only shot at changing the momentum of the case.
On his first day of testimony, he confidently told jurors that he was a well-meaning player in the Wild West of crypto and that he frequently met with lawmakers in Washington in hopes of building a regulatory framework for the industry. He said he never defrauded customers, but regretted not instituting better risk management at FTX before its collapse in November 2022. “We sure should have,” he said.
Under cross-examination, Bankman-Fried floundered as a prosecutor contrasted his many public statements with his private ones in an attempt to show he was a liar. Bankman-Fried gave evasive answers and said he had little recollection of past comments prosecutors cited. During closing arguments, Assistant U.S. Attorney Nicolas Roos told jurors that Bankman-Fried said he didn’t recall at least 140 times. “He approached every question like up was down and down was up,” Roos said.
Bankman-Fried founded FTX in 2019. By 2021, the exchange had millions of customers and roughly $1 billion in annual revenue, Bankman-Fried testified. It imploded after the crypto website CoinDesk published in early November 2022 what purported to be a leaked Alameda balance sheet, causing a run on FTX customer funds.
Presiding over the trial was 78-year-old U.S. District Judge Lewis Kaplan, who kept the case moving by scolding prosecutors and defense lawyers for asking unnecessary questions while providing moments of levity with quips about the Brooklyn Dodgers and recollections of working in his father’s deli as a child.
Bankman-Fried still has other legal troubles looming. He is facing additional charges that could go to trial in March, including allegations of bank fraud and bribery conspiracies. Those charges were added after the initial indictment and separated from the first trial because of litigation in the Bahamas over the terms of his extradition. Kaplan instructed prosecutors to let him know by Feb. 1 if they plan to proceed with those charges.
The jury, composed of nine women and three men, ranged in age from 33 to 68. The jurors included a former investment banker, a high school librarian and an unemployed social worker.
Prosecutors built their case around the testimony of Ellison and two other members of Bankman-Fried’s inner circle, all of whom agreed to cooperate with prosecutors after pleading guilty to fraud and other offenses. The trio corroborated each other’s accounts, which were bolstered by contemporaneous documents and Signal chats that prosecutors showed the jury. All three pointed to Bankman-Fried as the mastermind of the fraud and accused him of covering his tracks, including by using an auto-delete function on messaging apps.
Nishad Singh, Bankman-Fried’s childhood friend and FTX’s former director of engineering, testified about learning in September 2022 that Alameda had used $13 billion in FTX customer funds and was unable to pay it back. Singh said he was distressed at the time and spoke to Bankman-Fried about the financial hole in a meeting on the balcony of the Bahamas penthouse apartment they shared. Bankman-Fried was unconcerned and thought the money could eventually be paid back, Singh recalled.
“I’m not sure what there is to worry about,” Bankman-Fried said, according to Singh.
Ellison testified that Bankman-Fried was a risk-taker who was comfortable with lying and stealing as long as it benefited the greater good. To attract FTX customers, he cultivated an appearance “as a smart, competent, somewhat eccentric founder,” she said. He regularly posted on social media, spoke to journalists and testified before Congress to promote FTX as a safe place to trade.
Even when he knew FTX was on the brink of collapse, Bankman-Fried posted on Twitter, the social-media platform now known as X, to falsely reassure customers, Ellison testified. Prosecutors backed up her testimony by showing jurors a Nov. 7, 2022, post in which he wrote, “FTX is fine. Assets are fine.”
Bankman-Fried pushed back during his testimony, telling jurors he wasn’t involved in Alameda’s operation after appointing Ellison and another employee as co-CEOs in summer 2021. He only learned of Alameda’s rampant spending of customer funds in fall 2022, he told jurors. At FTX, he said, he was involved in decision-making at a high level, but his deputies were largely self-directed.
Assistant U.S. Attorney Danielle Sassoon drilled into his testimony in cross-examination, casting doubt on his assertion of being a hands-off boss and highlighting even relatively innocuous statements—such as why he didn’t cut his hair—to show his equivocations. The tense exchanges between Sassoon and Bankman-Fried gripped jurors.
“You think of yourself as a smart guy?” she asked.
“In many ways. Not in all ways,” he replied.