Sam Bankman-Fried, the founder and former CEO of FTX, has been found guilty on seven counts related to fraud and conspiracy in the operation of his exchange.
Reports from Bloomberg indicate that jurors deliberated for less than five hours on Thursday, Nov. 2 before finally reaching a guilty verdict.
The U.S. Department of Justice (DOJ) issued a brief statement on the verdict. Attorney General Merrick B. Garland said: “Sam Bankman-Fried thought that he was above the law. Today’s verdict proves he was wrong.” He added that the DOJ intends to hold accountable any other individuals who use innovations to hide their crimes.
The seven charges largely concerned the fact that Bankman-Fried lent funds from exchange customers to FTX’s sister company, Alameda Research. The funds were in part spent on political donations, real estate, and various other investments.
FTX became unable to meet customer withdrawals in November 2022. Both FTX and Alameda collapsed and filed for bankruptcy around that time.
The case is highly notable due to the scale of the crime. FTX was once among the largest crypto exchanges in operation, allowing for large-scale fund misuse. Trial proceedings determined that Alameda had borrowed $13 billion in customer assets from FTX by June 2022. FTX also allowed Alameda to maintain a negative balance and extended a theoretical maximum line of credit amounting to $65 billion.
SBF trial began in October
Bankman-Fried’s trial began on Oct. 3. Soon after, several FTX and Alameda associates, plus certain other individuals, appeared as witnesses for the prosecution.
Many FTX and Alameda associates — including Caroline Ellison, Gary Wang, and Nishad Singh — previously reached plea deals with prosecutors to reduce or avoid sentencing. They largely laid blame on Bankman-Fried despite pleading guilty themselves.
Bankman-Fried later provided his own testimony starting on Oct. 26. The executive’s testimony was widely criticized, with prosecutors claiming that he lied under oath and noting that he answered his own lawyer more directly than he answered prosecutors.
Though Bankman-Fried may face up to 115 years in prison, some former prosecutors and legal experts predict that his sentence will range between 15 and 25 years.
Judge Lewis Kaplan will sentence Bankman-Fried in March 2024 after a second trial that addresses allegations around political financing and bribery of Chinese officials.