Former crypto king Sam Bankman-Fried has been convicted of siphoning off billions of dollars in customer money, after pleading not guilty to criminal fraud charges tied to the collapse of crypto exchange FTX and sister hedge fund Alameda Research.
The FTX founder and multi-billionaire was convicted on all seven counts related to fraud and money laundering, whereby he plundered the accounts of more than one million customers.
Bankman-Fried was accused of laundering the money to feed his lavish lifestyle and build an empire of wealth and power. He was known to mix with A-list celebrities and politicians.
The prosecution’s key witnesses were made up of former members of Bankman-Fried’s inner circle.
Massive fall from grace
The verdict brings his precipitous fall from grace to a close, from being celebrated as a crypto prodigy to being labelled a criminal for misappropriating billions in customer funds.
The jury found that Bankman-Fried, beyond being the public face of FTX and a prominent figure in regulatory discussions, orchestrated a complex "pyramid of deceit," leading to the expropriation of funds from over a million customers. This was a sharp contradiction to his defence's portrayal of him as a mere "math nerd" who was detached from the operation of the investment fund Alameda Research, which played a central role in the financial discrepancies at FTX.
Prosecutors highlighted that Bankman-Fried had assured the safety of customer funds, touting robust risk management protocols at his exchange. However, the evidence presented depicted a starkly different reality, where Alameda Research was given unfettered access to customer money, making precarious investments that precipitated the downfall of both FTX and itself.
The court heard how Alameda was exempt from certain automated risk controls and enjoyed unlimited borrowing latitude, which, according to the prosecution, enabled Bankman-Fried to finance an opulent lifestyle, secure celebrity endorsements and funnel millions into political donations.
The prosecution contended that Bankman-Fried had not only crafted secret backdoors within FTX’s systems to benefit Alameda but had also misrepresented the entire operation, which had been deceptive from the start. Amid the trial, it emerged that Alameda had an astonishing theoretical borrowing limit of $65 billion, a figure that typified the reckless financial governance that led to the collapse of a once-thriving crypto empire.
Bankman-Fried will be sentenced shortly.