In the culmination of a month-long trial in New York, Sam Bankman-Fried, the former head of one of the world’s largest cryptocurrency exchanges, has been found guilty of charges related to fraud and money laundering.
The jury delivered its verdict after only four hours of deliberation.
This marks a dramatic downfall for the 31-year-old former billionaire, once a prominent figure in the cryptocurrency industry. Bankman-Fried was apprehended last year following the bankruptcy of his firm, FTX.
He now faces the prospect of a lengthy prison sentence, with his sentencing scheduled for March 28, 2024.
“Sam Bankman-Fried perpetrated one of the biggest financial frauds in American history – a multibillion-dollar scheme designed to make him the king of crypto,” US attorney Damian Williams said in a statement after the verdict.
“This case has always been about lying, cheating, and stealing, and we have no patience for it,” he added.
Prosecutors alleged that Bankman-Fried had engaged in deceitful practices, including misleading investors and lenders, and misappropriating billions of dollars from the cryptocurrency exchange FTX, ultimately contributing to its downfall. He faced seven counts of fraud and money laundering.
Bankman-Fried consistently pleaded not guilty to all charges, asserting that, despite his errors, his actions were carried out in good faith.
After the verdict Bankman-Fried’s lawyer Mark Cohen said: “We respect the jury’s decision. But we are very disappointed with the result.”
“Mr Bankman-Fried maintains his innocence and will continue to vigorously fight the charges against him,” he added.
A BBC request for comment regarding a potential appeal from Bankman-Fried’s spokesperson remained unanswered at the time of reporting.
Furthermore, three of Bankman-Fried’s former close associates, among them his ex-girlfriend Caroline Ellison, admitted guilt and entered into agreements to testify against him, aiming to secure reduced sentences for themselves. Their sentencing will take place at a later date.
“The government won this case by putting a lot of pressure on cooperators, getting deals with them very early on and trying this case in a very streamlined way,” said former federal prosecutor Renato Mariotti.
“Instead of overcomplicating the case, turning it into some complicated crypto case, they tried it as a garden variety fraud.”
During the trial, the prosecution provided evidence indicating that Bankman-Fried’s crypto trading company, Alameda Research, had accepted deposits on behalf of FTX customers during the exchange’s early stages. Traditional banks had initially refused to grant FTX an account.
Contrary to Bankman-Fried’s public assurances to safeguard these funds, he used the funds for purposes other than their intended protection. Specifically, he used the money to settle debts with Alameda lenders, purchase property, and make various investments and political contributions.
Bankman-Fried’s parents seemed disheartened when the court announced the guilty verdict.
At the time of filing for bankruptcy in November, Alameda had an outstanding debt of $8 billion (£6.5 billion) to FTX.
“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,” assistant US attorney Nicolas Roos said in his closing arguments.
In an attempt to persuade jurors that the prosecution had not produced sufficient evidence to support his claim of criminal intent, Bankman-Fried took the bold decision to testify on his own behalf.
“There was bad judgment,” said defence lawyer Mark Cohen, offering a portrait of a nerdy mathematician who was overwhelmed as his companies grew rapidly.
“That does not constitute a crime.”
Bankman-Fried defended the money transfers between his firms as “permissible” and testified that he was largely unaware of the financial hole described by his deputies until a few weeks before the FTX collapse last year.
The downfall left many customers unable to recover their funds.
Lawyers working on the bankruptcy case have since said they have recovered the vast majority of the missing money.
Bankman-Fried’s trial was closely watched for its implications for the crypto industry as a whole, which has failed to recover from last year’s market turmoil.
He has been seen as a poster child for the problems in the sector, which top regulators in the US have described as rife with criminality.
Before the collapse of his companies, he was known for hobnobbing with celebrities and appearing frequently in Washington and in the media, to discuss the sector.
The rapid growth of FTX and his deal-making last year, when a market downturn hit other crypto firms, earned him the moniker “the king of crypto”.
With Congress unlikely to pass new rules for crypto anytime soon, Mr Mariotti said he expected US courts to continue to be the site of battles over the industry.
“I really think having specific crypto regulations in the United States would reduce the sort of crime that occurred in this particular case,” he said.
“Sadly I don’t think we’re going to see regulation in the very short term… But it certainly means that the fight is going to continue in courts and civil cases litigated by the SEC [Securities and Exchange Commission] and CFTC [Commodity Futures Trading Commission]” he added, referring to US financial regulatory agencies.