Sam Bankman-Fried, the former head of one of the world’s largest cryptocurrency exchanges, has been convicted of fraud and money laundering following a month-long trial in New York.
The jury reached its verdict after just one day of deliberations.
This marks a dramatic downfall for Bankman-Fried, who was once a billionaire and a prominent figure in the crypto industry.
The 31-year-old was arrested last year after his company, FTX, went bankrupt.
He now faces the possibility of spending several decades in prison.
Prosecutors accused him of deceiving investors and lenders and embezzling billions of dollars from the cryptocurrency exchange FTX, ultimately leading to its collapse. Bankman-Fried was charged with seven counts of fraud and money laundering.
Although he pleaded not guilty and claimed that he had made mistakes but acted in good faith, the case quickly turned against him. Three of his former close associates, including his ex-girlfriend Caroline Ellison, pleaded guilty and agreed to testify against him in the hope of receiving reduced sentences. Their sentencing will take place at a later date.
During the trial, evidence was presented showing that Bankman-Fried’s crypto trading firm, Alameda Research, received deposits on behalf of FTX customers in the early days of the exchange, when traditional banks refused to provide them with an account. Rather than protecting these funds, as Bankman-Fried had publicly promised, he used the money to repay lenders, acquire property, make investments, and even make political donations.
When FTX went bankrupt in November of last year, Alameda owed the company $8 billion (£6.5 billion).
In his closing arguments, assistant US attorney Nicolas Roos stated, “He took the money. He knew it was wrong. He did it anyway because he thought he was smarter and better and that he could figure his way out of it.”
Bankman-Fried took the risk of testifying in his own defense in an attempt to convince the jury that the prosecutors had failed to prove his criminal intent.
Defense attorney Mark Cohen argued, “There was bad judgment. That does not constitute a crime.”
Bankman-Fried defended the transfers of money between his companies as “permissible” and claimed that he was largely unaware of the financial problems described by his subordinates until a few weeks prior to FTX’s collapse.
The failure of his companies left many customers unable to retrieve their funds. However, lawyers involved in the bankruptcy case have since stated that they have recovered the majority of the missing money.
Bankman-Fried’s trial drew significant attention due to its potential implications for the entire crypto industry, which has struggled to recover from the market turmoil of the previous year.
He was seen as an embodiment of the problems within the sector, which top US regulators have characterized as plagued by criminal activity.
Prior to the collapse of his companies, Bankman-Fried was known for socializing with celebrities and frequently appearing in the media and Washington, often dressed casually with wild curly hair, discussing the crypto sector.
His rapid ascent with FTX and his deal-making in the face of a market downturn last year earned him the nickname “the king of crypto”.
Learn more (for UK readers)
BBC Panorama: Downfall of the Crypto King
Panorama explores the rapid rise and dramatic fall of Sam Bankman-Fried, the mathematical genius who sought to revolutionize the world of crypto but ultimately became its greatest loser.
