After four weeks of brutal testimony about his sex life, his alleged financial crimes and his glory days as a multibillionaire, Sam Bankman-Fried has been given a new title Thursday: Fraudsters convicted.
A federal jury in Manhattan deliberated for less than a day before finding him guilty on all seven counts. He could face more than 100 years in prison at his sentencing, which is scheduled to take place in March.
The verdict ended Bankman-Fried’s precipitous slide. Just two years ago, Forbes named him one of the youngest entrants ever to the list of the country’s richest people, with a net worth of $22.5 billion. He socialized under Bill Clinton, Tony Blair and Tom Brady, wooed US senators from both parties and invested in luxury real estate.
Bankman-Fried, 31, was arrested in the Bahamas in December 2022 after his crypto exchange FTX and crypto trading firm Alameda Research suddenly collapsed. Shortly thereafter, federal prosecutors in the United States unsealed an eight-count indictment, including charges of wire fraud and conspiracy to commit money laundering.
Prosecutors later added more charges, such as attempting to bribe a foreign government. Due to legal technicalities surrounding his extradition, five of the charges were ultimately dropped (he could face trial next year).
The government’s case revolved around FTX’s decision to loan billions of dollars in customer deposits to Alameda, which then used the money to make risky investments and pay off its debts. In the fall of 2022, amid the turmoil in the crypto markets, customers tried to withdraw their money en masse. But the money was no longer there.
Four of Bankman-Fried’s former executives – Nishad Singh, Gary Wang, Ryan Salame and his ex-girlfriend Caroline Ellison – later pleaded guilty to federal charges. Singh, Wang and Ellison all testified during his trial.
“He directed me to commit these crimes,” said Ellison, the Alameda CEO. She told the jury she prepared inaccurate financial statements and shared them with Bankman-Fried in order to deceive investors about the amount of risk they were taking.
When Alameda collapsed, Ellison held a meeting with her staff. When asked who was responsible for the mess, she giggled uncomfortably and said, “Sam, I guess.”
Singh testified that the group engaged in “heinous criminal” activities.
According to Ellison, executives showed a complete disregard for global regulation. In one case, she said, they sent $150 million to Chinese officials to gain access to frozen accounts. They later referred to the debacle as “the thing.”
Ellison said they considered crazy alternatives, such as transferring money to accounts in the names of Thai sex workers. Bribery, she explained, was her backup plan.
Even before the trial, Judge Lewis Kaplan expressed frustration with Bankman-Fried, who was initially allowed to remain under house arrest at his parents’ home in California. Kaplan warned Bankman-Fried to follow the court’s orders after he used a virtual private network – or VPN – in February, ostensibly to watch the Super Bowl. Prosecutors argued that he may have attempted to use the Internet unsupervised.
In August, Kaplan sent Bankman-Fried to prison for leaking to Ellison Personal writings To The New York Timeswhich led to allegations that he tried to intimidate her before she testified.
When the trial began, it was Bankman-Fried’s lawyers who appeared to anger the judge. He repeatedly admonished them for their slow and monotonous approach to cross-examination. When the defense began presenting its case on October 26, Bankman-Fried appeared to be facing an uphill battle and, in an extremely risky move, he decided to testify himself.
Bankman-Fried appeared to be struggling. He was evasive at times during cross-examination, frequently telling Assistant U.S. Attorney Danielle Sassoon that he did not recall making statements to the press about the company’s operations and approach to risk management. She kept calling up exhibits where Bankman-Fried said exactly what she had described.
Sassoon also disputed Bankman-Fried’s claim that he knew little about Alameda’s massive debts. For example, she investigated an incident from the summer of 2022 that revealed Alameda was facing a huge financial hole; Bankman-Fried said he had not investigated the matter in depth. (It turns out the problem was partly due to a software bug.)
“It is your statement that as CEO some unknown people spent $8 billion without your knowledge?” Sassoon questioned. She asked why he had not asked his deputies to inform him.
“I was told they were busy and to stop asking questions,” he said.
Bankman-Fried admitted to the jury that he had committed “significant lapses” and that he deeply “regretted” not having better protected his customers’ money. However, he insisted his behavior was not criminal.
Clearly the jury didn’t buy it.