NEW YORK (AP) 鈥� FTX founder spectacular rise and fall in the cryptocurrency industry 鈥� a journey that included his testimony before Congress, a Super Bowl advertisement and dreams of a future run for president 鈥� hit rock bottom Thursday when a New York jury convicted him of fraud for stealing at least $10 billion from customer and investors.
After the monthlong trial, jurors rejected Bankman-Fried鈥檚 claim during testimony in Manhattan federal court that he never committed fraud or meant to cheat customers before FTX, once the world鈥檚 second-largest crypto exchange, collapsed into bankruptcy a year ago.
鈥淢r. Bankman-Fried. Please rise and face the jury,鈥� Judge Lewis A. Kaplan commanded just before a jury forewoman responded 鈥済uilty鈥� seven times to two counts of wire fraud, two counts of wire fraud conspiracy and three other conspiracy charges, which carry potential penalties adding up to 110 years in prison. Bankman-Fried is likely to face far less than the maximum at a sentencing set for March 28.
As the verdict was read, Bankman-Fried seemed stunned, appearing stone-faced, his hands clasped before him, as his lawyers remained sitting beside him. When he sat down, he looked down for several minutes.
His lawyer, Mark Cohen, later read a statement outside court to say they 鈥渞espect the jury鈥檚 decision. But we are very disappointed with the result.鈥�
鈥淢r. Bankman Fried maintains his innocence and will continue to vigorously fight the charges against him,鈥� Cohen said.
U.S. Attorney Damian Williams, who sat in the front row of the spectator section during the verdict, stood before cameras outside the courthouse and said Bankman-Fried 鈥減erpetrated one of the biggest financial frauds in American history, a multibillion dollar scheme designed to make him the king of crypto.鈥�
鈥淏ut here鈥檚 the thing: The cryptocurrency industry might be new. The players like Sam Bankman-Fried might be new. This kind of fraud, this kind of corruption is as old as time and we have no patience for it,鈥� he said.
He said the case should serve as a warning to every other fraudster who 鈥渢hinks they're untouchable, that their crimes are too complex,鈥� that they are too powerful to prosecute or can talk their way out of their crimes because 鈥淚 promise we'll have enough handcuffs for all of them.鈥�
The jury rejected Bankman-Fried insistence during three days of testimony that he never committed fraud or plotted to steal from customers, investors and lenders and didn鈥檛 realize his companies were at least $10 billion in debt until October 2022.
After the jury left the room, Bankman-Fried's parents, both Stanford University law professors, moved to the front row behind him. His father put his arm around his wife. As Bankman-Fried was led out of the courtroom, he looked back and nodded toward his mother, who nodded back and then became emotional, wiping her hand over her face after he left the room.
The trial attracted intense interest with its focus on a fraud on a scale not seen since the 2009 prosecution of Bernard Madoff, whose Ponzi scheme over decades cheated thousands of investors out of about $20 billion. Madoff pleaded guilty and was sentenced to 150 years in prison, where he died in 2021.
The prosecution of Bankman-Fried, 31, put a spotlight on the emerging industry of cryptocurrency and a group of young executives in their 20s who lived together in a $30 million luxury apartment in the Bahamas as they dreamed of becoming the most powerful player in a new financial field.
Prosecutors made sure jurors knew that the defendant they saw in court with short hair and a suit was not the man with big messy hair and shorts that became his trademark appearance after he started his cryptocurrency hedge fund, Alameda Research, in 2017 and FTX, his cryptocurrency exchange, two years later.
They showed the jury pictures of Bankman-Fried sleeping on a private jet, sitting with a deck of cards and mingling at the Super Bowl with celebrities including the singer Katy Perry. Assistant U.S. Attorney Nicolas Roos called Bankman-Fried someone who liked 鈥渃elebrity chasing.鈥�
In a closing argument, Cohen said prosecutors were trying to turn 鈥淪am into some sort of villain, some sort of monster.鈥�
鈥淚t鈥檚 both wrong and unfair, and I hope and believe that you have seen that it鈥檚 simply not true,鈥� he said. 鈥淎ccording to the government, everything Sam ever touched and said was fraudulent.鈥�
The government relied heavily on the testimony of three former members of Bankman-Fried鈥檚 inner circle, his top executives including his former girlfriend, Caroline Ellison, to explain how Bankman-Fried used Alameda Research to siphon billions of dollars from customer accounts at FTX.
With that money, prosecutors said, the Massachusetts Institute of Technology graduate gained influence and power through investments, contributions, tens of millions of dollars in political contributions, Congressional testimony and a publicity campaign that enlisted celebrities like comedian Larry David and football quarterback Tom Brady.
Ellison, 28, testified that Bankman-Fried directed her while she was chief executive of Alameda Research to commit fraud as he pursued ambitions to lead huge companies, spend money influentially and run for U.S. president someday. She said he thought he had a 5% chance to eventually be U.S. president.
Becoming tearful as she described the collapse of the cryptocurrency empire last November, Ellison said the revelations that caused customers collectively to demand their money back, exposing the fraud, brought a 鈥渞elief that I didn鈥檛 have to lie anymore.鈥�
FTX cofounder Gary Wang, who was FTX鈥檚 chief technology officer, revealed in his testimony that Bankman-Fried directed him to insert code into FTX鈥檚 operations so that Alameda Research could make unlimited withdrawals from FTX and have a credit line up to $65 billion. Wang said the money came from customers.
Nishad Singh, the former head of engineering at FTX, testified that he felt 鈥渂lindsided and horrified鈥� at the result of the actions of a man he once admired when he saw the extent of the fraud. He said the collapse last November left him suicidal.
Ellison, Wang and Singh all pleaded guilty to fraud charges and testified against Bankman-Fried in the hopes of leniency at sentencing.
Bankman-Fried was arrested in the Bahamas last December and extradited to the United States, where he was freed on a $250 million personal recognizance bond with electronic monitoring and a requirement that he remain at the home of his parents in Palo Alto, California.
His communications, including hundreds of phone calls with journalists and internet influencers, along with emails and texts, eventually got him in trouble when the judge concluded he was trying to influence prospective trial witnesses and ordered him jailed in August.
During the trial, prosecutors used Bankman-Fried鈥檚 public statements, online announcements and his Congressional testimony against him, showing how the entrepreneur repeatedly promised customers that their deposits were safe and secure as late as last Nov. 7 when he tweeted 鈥淔TX is fine. Assets are fine鈥� as customers furiously tried to withdraw their money. He deleted the tweet the next day. FTX filed for bankruptcy four days later.
In his closing, Roos mocked Bankman-Fried鈥檚 testimony, saying that under questioning from his lawyer, the defendant鈥檚 words were 鈥渟mooth, like it had been rehearsed a bunch of times?鈥�
But under cross examination, 鈥渉e was a different person,鈥� the prosecutor said. 鈥淪uddenly on cross-examination he couldn鈥檛 remember a single detail about his company or what he said publicly. It was uncomfortable to hear. He never said he couldn鈥檛 recall during his direct examination, but it happened over 140 times during his cross-examination.鈥�
Former federal prosecutors said the quick verdict 鈥� after only half a day of deliberation 鈥� showed how well the government tried the case.
鈥淭he government tried the case as we expected," said Joshua A. Naftalis, a partner at Pallas Partners LLP and a former Manhattan prosecutor. 鈥淚t was a massive fraud, but that doesn鈥檛 mean it had to be a complicated fraud, and I think the jury understood that argument.鈥�
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Associated Press reporter Ken Sweet contributed from Palm Springs, California.
Larry Neumeister, The Associated Press
