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Sam Bankman-Fried convicted of defrauding FTX customers

November 3, 2023

A US jury has found FTX founder Sam Bankman-Fried guilty on all counts of fraud, embezzlement and criminal conspiracy. The 31-year-old former cryptocurrency mogul could face decades in prison.

Sam Bankman-Fried
Sam Bankman-Fried was accused of stealing billions from customers of his cryptocurrency exchangeImage: Eduardo Munoz/REUTERS

A federal jury in New York has convicted FTX founder Sam Bankman-Fried of defrauding customers of his now-bankrupt cryptocurrency exchange. 

The 31-year-old former billionaire was accused of stealing billions from FTX customers and investors in one of the biggest financial frauds in US history.

Bankman-Fried, who will be sentenced at a later date, faces up to 110 years in prison.

Once regarded as the poster boy for the crypto industry and estimated to be worth $26 billion (€24.4 billion) by Fortune magazine, he is now known for pulling off the biggest financial scam since Bernard Madoff.

"His crimes caught up to him. His crimes have been exposed," Assistant US Attorney Danielle Sassoon told the jury before they began deliberations. She added that Bankman-Fried turned his customers' accounts into his "personal piggy bank," with up to $14 billion disappearing.

Mark Cohen, Bankman-Fried's attorney, said in a statement they "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 said.

What else happened during the trial?

The verdict came after a monthlong trial in which prosecutors argued the defendant had acted out of sheer greed, spending the money on investments, real estate and promotions for his cryptocurrency exchange. 

During the courtcase, three of Bankman-Fried's former top executives pleaded guilty to fraud charges and testified against him. 

The biggest witness against Bankman-Fried was his on-again-off-again girlfriend Caroline Ellison who told the jury that they had stolen "around $14 billion" from clients of FTX before it collapsed.

The cryptocurrency exchange founder admitted making "a number of small mistakes and a number of larger mistakes" while running the now-bankrupt exchange.

The biggest mistake, he said, was failing to implement a dedicated risk management team.

"We thought that we might be able to build the best product on the market," Bankman-Fried said. "It turned out basically the opposite of that. A lot of people got hurt, customers, employees, and the company ended up in bankruptcy."

However, he denied defrauding anyone or taking customers' funds. He had pleaded not guilty to all charges.

Biggest crypto bust

FTX, which had been among the world's largest cryptocurrency exchanges, filed for bankruptcy protection on November 11, 2022 in one of the highest-profile crypto blowups after traders pulled billions from the platform in a matter of three days.

Bankman-Fried resigned as FTX's chief executive officer the same day as the bankruptcy filing.

In a series of interviews and public appearances in late November and December of last year, Bankman-Fried acknowledged risk management failures but said he did not commit fraud while running the company. 

Sam Bankman-Fried, known in the crypto community as "S.B.F.," founded the cryptocurrency exchange FTX in 2019 after launching the crypto hedge fund Alameda Research in 2017. Prior to his involvement in the cryptocurrency sector, he worked as a trader on Wall Street.

mk/nm (Reuters, AFP, AP)