FTX Bankman Fried

Samuel Bankman-Fried

Ex-crypto mogul Sam Bankman-Fried convicted of defrauding FTX customers

Sam Bankman-Fried appears at Federal Court in New York 

FTX founder Sam Bankman-Fried's fraud trial in New York City

FILE PHOTO: Sam Bankman-Fried appears at Federal Court in New York

FILE PHOTO: Bankman-Fried attends a hearing on FTX fraud case in New York City

Former crypto hedge fund Alameda Research CEO Caroline Ellison departs the trial of former FTX Chief Executive Sam Bankman-Fried, in New York 

FILE PHOTO: Former FTX Chief Executive Bankman-Fried at a courthouse in New York

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FTX Co-Founder Sam Bankman-Fried Appears In Court

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NEW YORK — A jury on Thursday convicted FTX co-founder Sam Bankman-Fried of fraud, conspiracy and money laundering, the culmination of a month-long trial that saw the former crypto mogul take the stand in his own defense after his inner circle of friends turned deputies provided damning testimony against him.

The decision was reached after less than five hours of deliberation by a jury of nine women and three men, who found Bankman-Fried guilty on all charges: two counts of wire fraud, four counts of conspiracy to commit fraud and one count of conspiracy to commit money laundering. He could be sentenced to decades in prison.

Bankman-Fried’s lawyer suggested his client will appeal the conviction. “We respect the jury’s decision. But we are very disappointed with the result,” defense attorney Mark Cohen said in a statement. “Mr. Bankman Fried maintains his innocence and will continue to vigorously fight the charges against him.”

Bankman-Fried is accused of being one of the largest financial fraudsters in history, whose victims suffered nearly $10 billion in losses after FTX misappropriated customer funds to spend lavishly on luxury real estate, investments, and “dark money” political donations, all at his direction, the jury found.

“The cryptocurrency industry might be new; players like Sam Bankman-Fried might be new. But this kind of fraud, this kind of corruption, is as old as time, and we have no patience for it,” U.S. Attorney Damian Williams said.

Bankman-Fried’s parents, Stanford professors Joseph Bankman and Barbara Fried — who became fixtures in the courtroom seated behind their son throughout the trial — embraced each other in the moments before the verdict was announced. The defendant stood frozen, facing the jury, as the foreman announced the findings on each count. Fried appeared to hold back tears, then plugged her ears with her fingers as U.S. District Judge Lewis A. Kaplan commended the jurors for their work.

Before leaving the courtroom, Bankman-Fried turned and gave his parents a single nod and a soft smile.

Elizabeth Williams

In the five weeks the trial played out on the top floor of the Daniel Patrick Moynihan U.S. Courthouse in Manhattan, the jury heard from Bankman-Fried’s former romantic partner and the former CEO of hedge fund Alameda Research, Caroline Ellison; former FTX executives Nishad Singh and Gary Wang; and Bankman-Fried’s college roommate, Adam Yedidia. They offered consistent accounts, backed by documentary evidence, implicating Bankman-Fried as the mastermind of a sweeping scheme to steal customer funds and lie to investors.

But the most damaging testimony arguably came from Bankman-Fried himself. For the chance to tell his side of the story one final time, the disgraced crypto mogul sat through a gutting <a href="https://www.washingtonpost.com/business/2023/10/30/sam-bankman-fried-cross-examination/" target=_blank>cross-examination</a> by prosecutor Danielle Sassoon. She used Bankman-Fried’s own words, including from a whirlwind set of interviews he gave in the wake of his empire’s collapse, to expose what the prosecution described as a steady stream of lies.

Under prosecution’s fire, Bankman-Fried’s words come back to bite

During that questioning, Bankman-Fried claimed more than 140 times not to remember key details or his own statements, a fact that prosecutor Nicolas Roos noted in his closing argument Wednesday.

“This was a pyramid of deceit built by the defendant on a foundation of lies and false promises, all to get money, and eventually it collapsed, leaving countless victims in its wake,” Roos said.

In prosecutors’ telling, Bankman-Fried presided over a straightforward fraud dressed up as a breakthrough financial innovation. They traced Bankman-Fried’s theft of customer funds to 2021, when he ordered Ellison to spend $2 billion to buy back the FTX stake owned by rival crypto exchange Binance. Ellison responded that the business only had half that amount on hand and would have to borrow the rest from FTX customers, according to her testimony. Bankman-Fried told her to proceed anyway.

“It’s clear as day the defendant knows that they’re stealing and committing fraud. And that’s exactly what they do,” Roos said in his <a href="https://www.washingtonpost.com/business/2023/11/01/bankman-fried-trial-sbf/" target=_blank>closing argument</a>.

Prosecutors said Bankman-Fried tapped customer funds again that fall to fund $3 billion in venture investments, despite Ellison warning that the spending could prove ruinous if the crypto market went south.

<b>What charges is Sam Bankman-Fried facing?</b>

Federal prosecutors in the Southern District of New York <a href="https://www.washingtonpost.com/technology/2022/12/13/sam-bankman-fried-ftx-hearing-bahamas-live/#link-N4BQDJFXIVFLNFJPJJEZVQXD4I" target=_blank>unsealed an eight-count indictment</a> against Bankman-Fried, alleging fraud and conspiracy.

The Commodity Futures Trading Commission<a href="https://www.washingtonpost.com/technology/2022/12/13/sam-bankman-fried-ftx-hearing-bahamas-live/#link-DSSWVOTELFESRIST6CYEPNWGDU" target=_blank> filed fraud charges</a> against him, seeking restitution for investors and customers in civil court.

The Securities and Exchange Commission <a href="https://www.washingtonpost.com/technology/2022/12/12/bankman-fried-arrested/" target=_blank>lobbed its own civil charges</a> at Bankman-Fried for allegedly “orchestrating a scheme to defraud equity investors.”

A jury convicted FTX co-founder Sam Bankman-Fried of fraud, conspiracy and money laundering in November 2023.

FTX customers will not fully recover their money, the company’s new CEO, John J. Ray III, told the House Financial Services Committee.

Ray sees the alleged crimes of the crypto company’s collapse as simple, despite the seemingly complex nature of the circumstances. “This isn’t sophisticated whatsoever. This is just plain old embezzlement,” he said.

<b>What does this mean for the crypto industry?</b>

Bankman-Fried gave about $40 million in political donations this cycle. <a href="https://www.washingtonpost.com/business/2022/12/14/sbf-ftx-political-donations/" target=_blank>See who benefited. </a>

The collapse has focused new scrutiny on the lack of <a href="https://www.washingtonpost.com/technology/2022/12/14/sec-gensler-crypto-ftx/" target=_blank>oversight and regulation</a> in an industry that has operated outside conventional banking rules.

Bankman-Fried’s defense attorneys tried to present him as a well-meaning if overwhelmed entrepreneur who paid too little attention to mounting risks and trusted too much in his underlings.

But the government presented a very strong case, trial observers have said.

“Even in a complicated case, the jury can sometimes come in quickly,” said Harry Sandick, a former assistant U.S. attorney in the Southern District of New York. “Here the government made it easy for them: The evidence came in cleanly, and the government’s summation tied up any loose ends.”

Thursday’s verdict comes exactly one year after the publication of a CoinDesk <a href="https://www.coindesk.com/business/2022/11/02/divisions-in-sam-bankman-frieds-crypto-empire-blur-on-his-trading-titan-alamedas-balance-sheet/" target="_blank">article</a> that highlighted the unusually close ties between Bankman-Fried’s two companies, FTX and Alameda, prompting a chain of events that led to the downfall of one of the crypto world’s most visible figures.

FTX was one of the largest crypto trading exchanges, and the company spent millions on high-profile advertising, hiring megastars such as quarterback Tom Brady and comedian Larry David as pitchmen. Bankman-Fried, meanwhile, cultivated an image as a philanthropist and champion of regulation for his industry. At its peak, Bankman-Fried’s net worth was estimated in the tens of billions.

“We thought that we might be able to build the best product on the market,” Bankman-Fried said in testimony last week. “It turned out basically the opposite of that. A lot of people got hurt.”

Columbia University, MS in Journalism; St. Olaf College, BA in English

Eli Tan is a business reporter at The Washington Post. He lives in Washington, D.C.

Eli Tan

Columbia University, BA in American history

Tory Newmyer covers economic policy and the intersection of Wall Street and Washington. He previously worked at Fortune, where he spent seven years as the magazine's Washington correspondent.

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Sam Bankman-Fried convicted on all charges after weeks-long criminal trial

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