Sam Bankman-Fried
Sam Bankman-Fried (file photo) Image Credit: Bloomberg

Sam Bankman-Fried was convicted of a massive fraud that led to the collapse of his FTX exchange, following a month-long trial that pitted the testimony of the former crypto king against that of some of his closest friends.

Bankman-Fried was found guilty of seven counts of fraud and conspiracy after jurors in Manhattan deliberated for less than five hours Thursday. He faces as much as 20 years in prison on each of the most serious charges. Judge Lewis Kaplan set a sentencing date in March.

The verdict is a win for Manhattan US Attorney Damian Williams in the highest-profile criminal prosecution in the crypto world. It also caps a spectacular fall for Bankman-Fried from early 2022 when FTX was valued at $32 billion and celebrities including Tom Brady, Larry David and Steph Curry were paid to urge people to trade digital currency on the platform.

'One of the biggest frauds'

Bankman-Fried "perpetrated one of the biggest financial frauds in American history." Williams said after the verdict. "A multibillion dollar scheme designed to make him the King of Crypto."

Prosecutors said Bankman-Fried directed the transfer of FTX customer money into Alameda Research, an affiliated hedge fund, for risky investments, political donations and expensive real estate before both companies collapsed into bankruptcy last year.

Bankman-Fried was standing, holding his hands in front of him and looking at the jury box, as he listened to the verdict. He was led out of the courtroom a few minutes later as his parents watched from the front row of the public gallery.

His father, Joseph Bankman, doubled over and put his head down as the guilty verdicts were read out.

'Pyramid of deceit'

Prosecutors characterized him as the mastermind of a massive fraud at Bahamas-based FTX, of creating a "pyramid of deceit" built on lies and false promises. Bankman-Fried's lawyers positioned him as a hard-working math nerd who tried in good faith to reverse the fast-deteriorating situation in the company last year.

Bankman-Fried's attorney, Mark Cohen, said he will consider an appeal.

"We are very disappointed with the result," Cohen said in a statement. "Mr. Bankman-Fried maintains his innocence and will continue to vigorously fight the charges against him."

The trial featured evidence from Bankman-Fried's former friends and colleagues, including Alameda Chief Executive Officer Caroline Ellison, FTX co-founder Gary Wang and engineering chief Nishad Singh. All three members of Bankman-Fried's inner circle pleaded guilty to felony charges and took the stand to implicate him in hopes of avoiding prison.

Ellison, who had an on-and-off romantic relationship with Bankman-Fried, gave the most emotional testimony of the trial, tearing up as she described the days leading to FTX's Nov. 11, 2022, bankruptcy filing.

"That was overall the worst week of my life," she told jurors.

Singh, a close friend of Bankman-Fried's younger brother, testified that he became suicidal around the same time.

A few days later, Bankman-Fried took the stand, a risky step in many white-collar cases. He struggled under cross-examination to justify his testimony in comparison to the many interviews he gave after FTX collapsed.

'Tough Spot'

"He was in a very tough spot," Robert Frenchman, a white-collar defense attorney with Mukasey Frenchman LLP. "He was somewhat desperate and the testimony of his former colleagues was pretty devastating so his team felt like he had to do something and it wasn't enough."

The verdict followed a series of legal setbacks for Bankman-Fried throughout the case, including rulings keeping him locked up before trial and limiting the evidence his team could present.

Bankman-Fried was forced to prepare for trial from a Brooklyn federal jail after the judge revoked his bail in August. Kaplan determined that Bankman-Fried likely committed witness tampering on two occasions, including once when he shared Ellison's private writings with a reporter.

Kaplan initially permitted Bankman-Fried to remain free on house arrest, in the Palo Alto, California, home of his parents, both Stanford Law School professors.

The judge also ruled against Bankman-Fried on several pretrial motions, holding that he couldn't call seven expert witnesses to testify about the crypto industry, political donations, Alameda's balance sheets and the use of customer funds.

The trial itself featured another setback for Bankman-Fried following an uncommon proceeding. The judge blocked Bankman-Fried's team from telling jurors about advice he got from lawyers, but not before putting the former CEO on the stand for three hours, outside the presence of the jury, to preview his testimony.

Kaplan had earlier severed five other charges, which were put on hold for a separate, future trial after Bankman-Fried's lawyers argued they weren't part of the extradition agreement with the Bahamas that cleared the way for his return to the US.