Sam Bankman-Fried Is Found Guilty of 7 Counts of Fraud and Conspiracy

“Perpetrators of scams will have to face the law and suffer the consequences of their crimes, even in crypto,” said Cory Klippsten, the founder of the Swan Bitcoin financial services firm and a frequent critic of the industry. “The ‘Wild West’ days are over.”

Mr. Bankman-Fried was always expected to face an uphill battle in court. After FTX imploded, three of his top deputies pleaded guilty to fraud and agreed to cooperate with prosecutors in return for leniency. During the trial, they testified that Mr. Bankman-Fried had repeatedly directed them to pilfer FTX customer funds and lie to the public that billions in customer money had been routed to its sister trading firm, Alameda Research.

Mr. Bankman-Fried’s lawyers argued that he had operated his businesses in good faith and never intended to break the law. But they struggled to poke significant holes in the cooperators’ stories, interrupted by wave after wave of government objections. And when Mr. Bankman-Fried took the stand to defend himself, he often seemed flustered, claiming numerous times that he couldn’t remember potentially incriminating conversations.

Mr. Bankman-Fried rose to prominence by marketing himself as an unusual sort of billionaire — a force for good who accumulated wealth in the hopes of eventually giving it all away. He founded FTX in 2019, and raised billions of dollars from investors to turn it into one of the world’s leading crypto companies.

On trips to Washington and Los Angeles, he hobnobbed with politicians and movie stars, and made tens of millions of dollars in campaign contributions to both Democrats and Republicans. During his ascent, business partners likened him to John Pierpont Morgan, the pioneering banker who once dominated the finance industry.

Mr. Bankman-Fried tried to dismiss FTX’s collapse as the unfortunate result of a monumental accounting error, rather than a deliberate fraud. But at his trial, prosecutors argued that he had repeatedly lied to customers, lenders and investors, using their funds to build himself up into a crypto titan.

“This was a fraud that occurred on a massive scale,” Nicolas Roos, one of the federal prosecutors, said in the government’s closing statement. “Thousands of people lost billions of dollars.”

Over the course of the trial, the government called more than a dozen witnesses, including the three cooperators, who had lived with Mr. Bankman-Fried in a palatial, five-bedroom penthouse in the Bahamas that the government claimed was purchased using FTX customer money.

The most emotional moment of the prosecution’s case arrived during the testimony of Caroline Ellison, the chief executive of Alameda and Mr. Bankman-Fried’s on-and-off girlfriend. Over three days on the witness stand, Ms. Ellison said she had conspired with Mr. Bankman-Fried to mislead the public and doctor balance sheets that she sent to lenders.

Fighting back tears, Ms. Ellison said the collapse of FTX was strangely cathartic. “I felt this sense of relief that I didn’t have to lie anymore,” she said, “and that I could start taking responsibility even though I felt indescribably bad.”

Ms. Ellison, Mr. Wang and Mr. Singh, who all pleaded guilty to fraud, are scheduled to be sentenced in late 2024.

The trial reached a climax late last month when Mr. Bankman-Fried took the stand. He insisted that he had never intended to commit crimes and had just wanted to build a successful company. But on cross-examination, Danielle Sassoon, a lead prosecutor, exposed cracks in his story, showing the contradictions between his public statements and how he behaved in private.