Sam Bankman-Fried, the founder of collapsed cryptocurrency exchange FTX, was found guilty of fraud charges Thursday, according to the Washington Post.
Bankman-Fried was charged with conspiracy to commit wire fraud, securities fraud, money laundering, and violations of campaign finance law in December 2022. The 30-year-old allegedly defrauded millions of investors through FTX crypto schemes, including using customer investments in the amount of $8 million to fund side investments and pay off debts.
“This is a pyramid of deceit by the defendant built on lies and false promises,” Assistant U.S. Attorney Nicholas Roos said during closing arguments Wednesday. “Now that you’ve seen all the evidence and heard all testimonies, you know the answer… The defendant is responsible.”
Bankman-Fried’s lawyer Mark Cohen argued that while “any good movie needs a villain,” his client — “a nerdy high school math guy” — was one manufactured by the government. The trial also featured Bankman-Fried testifying in his own defense, while also appearing to suffer from memory loss, evaded questions, and gave downright unhelpful answers upon cross-examination.
At one point the third-largest crypto exchange in the world, FTX collapsed days after balance sheets related to Bankman-Fried’s investment firm Alameda Research were leaked. The fallout revealed the extent of the exchange’s financial insolvency, and led to allegations that Bankman-Fried used investments made by FTX customers to pay off debts and make side investments and contributions, transferring funds without proper disclosure and oversight.
The federal indictment alleged that Bankman-Fried and his associates “willfully and knowingly did combine, conspire, confederate, and agree together and with each other to commit wire fraud,” while defrauding customers of FTX by “misappropriating those customers’ deposits and using those deposits to pay expenses and debts of Alameda Research.”
In December 2022, Caroline Ellison, CEO of the privately-controlled hedge fund Alameda Research, which is owned by Bankman-Fried, pleaded guilty to criminal charges of conspiracy to commit wire fraud on customers of FTX, wire fraud on customers of FTX, conspiracy to commit wire fraud on lenders of Alameda Research and wire fraud on lenders of Alameda Research, conspiracy to commit commodities fraud, conspiracy to commit securities fraud and conspiracy to commit money laundering. To avoid a lengthy prison sentence, Ellison testified against Bankman-Fried, and provided shocking testimony.
FTX co-founder Gary Wang pleaded guilty to conspiracy to commit wire fraud on customers of FTX, wire fraud on customers of FTX, conspiracy to commit commodities fraud and conspiracy to commit securities fraud. Like Ellison, he faced decades in prison before agreeing to testify against Bankman-Fried.