Sam Bankman-Fried, the former head of cryptocurrency exchange FTX, was found guilty of each of the seven criminal charges he was facing, marking a spectacular fall from grace for a “math nerd” who was once a shining star in finance.
Bankman-Fried now faces the prospect of spending decades in prison after being convicted on charges including securities fraud, wire fraud and money laundering.
During a trial that lasted more than four weeks, prosecutors sought to prove that Bankman-Fried had been a criminal mastermind who orchestrated one of the largest financial frauds in history.
In a courtroom that was frequently packed, prosecutors detailed how Bankman-Fried and some of his top lieutenants secretly funneled billions of dollars in customer assets from FTX to Alameda Research, a private trading firm he also controlled.
The U.S. government said the former billionaire treated Alameda like a personal piggybank, using FTX customer money to buy luxury real estate for friends and family, and to make political donations and risky investments.
“This was a pyramid of deceit built by the defendant on a foundation of lies and false promises, all to get money,” Asst. U.S. Attorney Nicholas Roos told the court in his closing argument. “And eventually it collapsed, leaving countless victims in its wake.”
From a penthouse in The Bahamas to prison
The conviction marks a sharp reversal of fortune for a now 31-year old M.I.T. graduate who just last year was living large in a $35 million penthouse with some of his co-workers, as he ran a crypto empire that was estimated to be worth tens of billions of dollars during its heyday.
As FTX grew, Bankman-Fried became a celebrity in his own right at a time when the popularity of cryptocurrencies surged. There was a wave of investments from amateur traders and established Wall Street firms alike, and Bankman-Fried capitalized on the craze.
Instantly recognizable by his disheveled hair and his typical attire of a T-shirt and shorts, he was feted at conventions, and hung out with celebrities like former quarterback Tom Brady.
But his businesses started to crumble after an article raised concerns about the financial health of Alameda. That prompted spooked customers at FTX to withdraw their funds, in what was effectively a crypto run on the bank.
On Nov. 11, FTX and Alameda Research filed for bankruptcy. One month later, Bankman-Fried was arrested in The Bahamas.
Bankman-Fried’s friends turned against him
Then, one by one, Bankman-Fried’s former executives started to turn against him, including Caroline Ellison, who headed Alameda at one point, and was also his on-again, off-again girlfriend.
She and other colleagues, including Gary Wang – who co-founded Alameda Research and FTX with Bankman-Fried — pleaded guilty to separate charges, and agreed to cooperate with federal prosecutors.
Their testimony proved damning during the trial.
They told the court Bankman-Fried directed them to commit crimes, and their comments were especially compelling because the cooperating witnesses weren’t just Bankman-Fried’s colleagues, they were also some of his closest friends.
Wang, for example, was Bankman-Fried’s friend at math camp and his roommate at M.I.T.
Bankman-Fried’s Hail Mary
Perhaps the most dramatic moment in the trial came when Bankman-Fried testified in his own defense — something most white-collar criminal defendants don’t do.
The trial had gone so badly for him that he decided to throw a Hail Mary, hoping it would keep him out of prison.
It was a high-stakes gamble for someone who has a reputation for embracing risk. But it didn’t work.
Bankman-Fried wilted under withering cross-examination from Danielle Sassoon, a formidable prosecutor who clerked for the late Supreme Court Justice Antonin Scalia.
She used Bankman-Fried’s own words against him to great effect, and she had plenty to choose from.
For years, Bankman-Fried was the public face of FTX, eagerly courting reporters, posting Tweets and speaking at conferences.
And he continued to seek the limelight even after he was indicted and placed under house arrest at his parents’ home in Northern California.
Bankman-Fried continued to talk to, and share sensitive information about the case with, journalists, leaving Judge Lewis Kaplan so fed up that he revoked Bankman-Fried’s bail and sent him to jail.
Bankman-Fried’s defense crumbles
Sassoon used Bankman-Fried’s comments to show that there was a stark difference between what Bankman-Fried said in public, and how he acted behind the scenes.
For example, when FTX was teetering on the brink, Bankman-Fried told his hundreds of thousands of followers on X, formerly known as Twitter, it was in sound shape, even as prosecutors claimed he knew that couldn’t have been farther from the truth.
“FTX is fine,” he tweeted on Nov. 7, just days before the company imploded. “Assets are fine.”
The picture painted by the prosecution was at odds with Bankman-Fried’s defense, that he was not a “movie villain,” but a “math nerd” who got in over his head.
The defense also tried to argue Bankman-Fried was an inexperienced executive who was unable to keep tabs on what was happening at two multibillion dollar companies or to properly supervise executives at FTX and Alameda Research.
In his closing argument, Bankman-Fried’s lawyer, Mark Cohen said Bankman-Fried made mistakes, but argued he always acted in good faith and never intended to commit any crimes.
“In the real world, people misjudge things,” Cohen said. “They hesitate. They don’t plan for the unexpected. They make good and bad business decisions, and they make mistakes that later on they wish they could have fixed.”
After several hours of deliberation, the jury sided with the prosecution.
Bankman-Fried is likely to appeal the verdict. For now, he remains incarcerated in a federal jail in Brooklyn, facing the prospect of spending the rest of his life in prison.
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