FTX founder Sam Bankman-Fried convicted of defrauding cryptocurrency customers

National News

In this courtroom sketch, FTX founder Sam Bankman-Fried, right, testifies as Judge Lewis Kaplan, upper left, presides during Bankman-Fried’s trial in Manhattan federal court, Tuesday, Oct. 31, 2023, in New York. Elizabeth Williams via AP

By LARRY NEUMEISTER, Associated Press

November 2, 2023

NEW YORK (AP) — A federal jury convicted FTX founder Sam Bankman-Fried on Thursday of fraud charges accusing him of stealing about $10 billion from customers and investors in what a prosecutor says was one of the biggest frauds in U.S. history.

The verdict came quickly after a Manhattan federal court jury began deliberating midway through the afternoon.

Bankman-Fried, 31, could face decades in prison after prosecutors said he cheated thousands of customers of billions of dollars before the collapse of his companies in November, 2022. Prosecutors said he spent the money on investments, real estate, promotions for his cryptocurrency exchange and political contributions.

He was extradited from the Bahamas to the United States in December. Originally freed on a $250 million personal recognizance bond to live with his parents in Palo Alto, California, he was jailed in August after Judge Lewis A. Kaplan concluded that he had tried to tamper with possible trial witnesses.

The verdict came after a monthlong trial in which three of his former fellow top executives pleaded guilty to fraud charges and testified against him.

Bankman-Fried testified for three days, telling the jury he didn’t commit fraud.

After his arrest last year, U.S. Attorney Damian Williams said the fraud was one of the largest in U.S. history.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

NEW YORK (AP) — A New York jury began deliberating on Thursday whether FTX founder Sam Bankman-Fried was guilty of fraud in the disappearance of billions of dollars from his customers’ accounts on the cryptocurrency exchange he created four years ago.

The Manhattan federal court jury began its work after a judge explained the law that will steer them through seven charges lodged against the California man.

Bankman-Fried, 31, testified during the monthlong trial that he did not defraud thousands of investors worldwide.

He was extradited to New York from the Bahamas last December to face fraud charges. He’s been jailed since August, when Judge Lewis A. Kaplan ruled that he’d tried to influence potential trial witnesses and could no longer remain free on the $250 million personal recognizance bond that required him to remain at his parents’ Palo Alto, California, home.

Earlier Thursday, Assistant U.S. Attorney Danielle Sassoon delivered a rebuttal argument, the last of closing arguments that began a day earlier.

She said Bankman-Fried repeatedly promised thousands of customers worldwide that the money they placed on the FTX exchange was safe and guarded even as he was stealing from them, always wanting “billions and billions of dollars more from his customers to spend on gaining influence and power.”

Sassoon, who cross examined Bankman-Fried late last week and early this week, said Bankman-Fried wanted to be U.S. president some day but first wanted to have the biggest cryptocurrency exchange in the world. At its peak, FTX was the second-largest.

She said he “dazzled investors and Congress and the media, and worked around the clock to build a successful business” while overseeing the stealing of FTX funds.

“He knew it was wrong, he lied about it and he took steps to hide it,” the prosecutor said.

On Wednesday, Bankman-Fried attorney Mark Cohen said in his closing argument that his client “may have moved too slowly” when it became clear that Alameda Research, a cryptocurrency fund he started in 2017, could not restore billions of dollars borrowed from FTX when customers demanded it.

“He may have hesitated,” Cohen said. “But he always thought that Alameda had sufficient assets on the exchange and off the exchange to cover all of its liabilities.”

He added: “Business decisions made in good faith are not grounds to convict.”

Cohen told jurors to recall Bankman-Fried’s testimony as they review evidence.

“When Sam testified before you, he told you the truth, the messy truth, that in the real world miscommunications happen, mistakes happen, delays happen,” Cohen said. “There were mistakes, there were failures of corporate controls in risk management, and there was bad judgment. That does not constitute a crime.”