Sam Bankman-Fried was convicted of a massive fraud that led to the collapse of his FTX exchange, following a month-long trial that pitted the testimony of the former crypto king against that of some of his closest friends.
Bankman-Fried was found guilty of seven counts of fraud and conspiracy after jurors in Manhattan deliberated for less than five hours Thursday. He faces as much as 20 years in prison on each of the most serious charges. Judge Lewis Kaplan set a sentencing date in March.
The verdict is a win for Manhattan US Attorney Damian Williams in the highest-profile criminal prosecution in the crypto world. It also caps a spectacular fall for Bankman-Fried from early 2022 when FTX was valued at $32 billion and celebrities including Tom Brady, Larry David, and Steph Curry were paid to urge people to trade digital currency on the platform.
Bankman-Fried “perpetrated one of the biggest financial frauds in American history,” Williams said after the verdict. “A multibillion-dollar scheme designed to make him the King of Crypto.”Prosecutors said Bankman-Fried directed the transfer of FTX customer money into Alameda Research, an affiliated hedge fund, for risky investments, political donations, and expensive real estate before both companies collapsed into bankruptcy last year.
Bankman-Fried was standing, holding his hands in front of him and looking at the jury box, as he listened to the verdict. He was led out of the courtroom a few minutes later as his parents watched from the front row of the public gallery.
His father, Joseph Bankman, doubled over and put his head down as the guilty verdicts were read out.
Prosecutors characterized Bankman-Fried as the mastermind of a massive fraud at Bahamas-based FTX, creating a “pyramid of deceit” built on lies and false promises. Bankman-Fried’s lawyers positioned him as a hard-working math nerd who tried in good faith to reverse the fast-deteriorating situation in the company last year.
The Seven Charges Against Sam Bankman-Fried
Source: US Department of Justice
Bankman-Fried’s attorney, Mark Cohen, said he will consider an appeal.
“We are very disappointed with the result,” Cohen said in a statement. “Mr. Bankman-Fried maintains his innocence and will continue to vigorously fight the charges against him.”
The trial featured evidence from Bankman-Fried’s former friends and colleagues, including Alameda Chief Executive Officer Caroline Ellison, FTX co-founder Gary Wang and engineering chief Nishad Singh. All three members of Bankman-Fried’s inner circle pleaded guilty to felony charges and took the stand to implicate him in hopes of avoiding prison.
Ellison, who had an on-and-off romantic relationship with Bankman-Fried, gave the most emotional testimony of the trial, tearing up as she described the days leading to FTX’s Nov. 11, 2022, bankruptcy filing.
“That was overall the worst week of my life,” she told jurors.
Singh, a close friend of Bankman-Fried’s younger brother, testified that he became suicidal around the same time.
A few days later, Bankman-Fried took the stand, a risky step in many white-collar cases. He struggled under cross-examination to justify his testimony in comparison to the many interviews he gave after FTX collapsed.
“He was in a very tough spot,” said Robert Frenchman, a white-collar defense attorney with Mukasey Frenchman LLP. “He was somewhat desperate and the testimony of his former colleagues was pretty devastating so his team felt like he had to do something and it wasn’t enough.”
The verdict followed a series of legal setbacks for Bankman-Fried throughout the case, including rulings keeping him locked up before trial and limiting the evidence his team could present.
Bankman-Fried was forced to prepare for trial from a Brooklyn federal jail after the judge revoked his bail in August. Kaplan determined that Bankman-Fried likely committed witness tampering on two occasions, including once when he shared Ellison’s private writings with a reporter.
Kaplan initially permitted Bankman-Fried to remain free on house arrest, in the Palo Alto, California, home of his parents, both Stanford Law School professors.
The judge also ruled against Bankman-Fried on several pretrial motions, holding that he couldn’t call seven expert witnesses to testify about the crypto industry, political donations, Alameda’s balance sheets, and the use of customer funds.
The trial itself featured another setback for Bankman-Fried following an uncommon proceeding. The judge blocked Bankman-Fried’s team from telling jurors about advice he got from lawyers, but not before putting the former CEO on the stand for three hours, outside the presence of the jury, to preview his testimony.
Kaplan had earlier severed five other charges, which were put on hold for a separate, future trial after Bankman-Fried’s lawyers argued they weren’t part of the extradition agreement with the Bahamas that cleared the way for his return to the US.
The defense of Sam Bankman-Fried was halting, confusing, and ultimately futile. A jury quickly found him guilty on Thursday night of all seven of the charges he faced, about a year after his crypto exchange and hedge fund collapsed in on each other like a star.
The judge at the disgraced FTX founder’s trial in New York, Lewis Kaplan, regularly barked at Bankman-Fried’s lawyers for being overly repetitive. The lawyers did not appear to have a robust defense plan, something that became especially clear when the lead defense attorney, Mark Cohen, told the judge in a conversation midtrial that he wasn’t sure if the defense would even present a case, much less what it would entail. That is the defense’s prerogative. The prosecution has to prove guilt; the defense doesn’t have to prove innocence.
But the prosecutors for the U.S. Attorney of the Southern District of New York were aggressive and well-organized, trotting out former associate after former associate to lay out a damning story of Bankman-Fried as a criminal mastermind who bilked his customers and lenders for billions of dollars. And even as the trial proceeded, it wasn’t easy to discern his or his team’s plan to beat the charges. Putting the defendant on the stand in a criminal trial? Often not a good idea, lawyers will tell you. And letting the prosecution’s witnesses run all over the defendant, without making an aggressive counterattack on their credibility and character? Also odd, and not only to armchair lawyers following the case from the bleachers.
Bankman-Fried’s defense indeed offered very little, so little that even actual lawyers with crypto and criminal expertise have been taken aback as the trial has gone on. But the trial’s progress has made clear why the former crypto boy king’s lawyers got beaten up so badly: They had an impossible case in which they were representing an impossible defendant.
“Even some attorneys at times have been baffled at what exactly the defense has been,” said Tyler Rutherford, a lawyer at the firm Pastore, who works in regulatory compliance, contract law, and corporate law and has represented crypto and blockchain companies. We spoke on Wednesday, as the trial wrapped and a guilty outcome looked certain. “I think ultimately the defense has put forward the best defense they can, which is basically trying to refute the testimony that the prosecution put forward and refute the evidence the prosecution has put forward. And unfortunately for Sam, it’s just stacked against him. And so I think one of the reasons why your everyday individuals or reporters following the trial, and even some attorneys, are kind of baffled. ’OK, well, what exactly is the defense?’ That’s partly due to the fact that there’s just such a mound of evidence against Sam.”
The defense’s first problem was that the prosecution’s witnesses were many, and for convicted financial criminals who admitted to helping to defraud customers out of billions of dollars, they are fairly sympathetic. Nishad Singh, FTX’s former engineering director, testified about how intimidating Bankman-Fried could be to him. He testified that when Bankman-Fried wasn’t happy with him, the defendant would show it by “grinding his finger, closing his eyes, grinding his teeth or tongue in his mouth, and when he opened them to respond, he would sort of glare at me with some intensity.” Caroline Ellison, the former boss of Bankman-Fried’s affiliated hedge fund, Alameda Research, and also his former girlfriend, testified that Bankman-Fried talked her out of leaving his companies and that when the jig was finally up, it came as a relief because she wouldn’t have to keep lying. The witnesses from Bankman-Fried’s inner circle testified in support of the prosecution’s story: that Bankman-Fried was not just a criminal, but an ambitious villain who directed their participation in an overt series of frauds.
Typically, in a case like this, the defense attorney would spend cross-examination attempting to tear those witnesses limb from limb, shredding their credibility as they go. After all, they’re admitted criminals, and they’re testifying as part of agreements for leniency. Bankman-Fried’s lawyers probably were trying to cut into the believability of those witnesses, but they fished so meekly for a damaging response that it sometimes looked like they were letting the witnesses off the hook. That was likely for a reason. For example, Ellison, the star witness of the case because of her intimate business and personal relationships with Bankman-Fried, came off as a remorseful, chastened young person who wanted to atone for what she’d done.
“To go after her would be totally not just unproductive, but would make people dislike the defense,” Rachel Maimin, a former assistant U.S. attorney in the same office that is now prosecuting this case, told me. “So you really have to be careful. It’s like when someone’s mom goes to the stand and they’re like, ‘My son is innocent!’ You can’t really go after her: ‘Well, he was selling drugs in your house. Didn’t you know that?’” Defense lawyers want to make juries like their clients, and berating witnesses who sat below your allegedly conniving client on the org chart is not a good way to do it.
With so many compelling witnesses telling one story for the other side and virtually no one lining up for him, Bankman-Fried and his lawyers made a call they probably did not want to make: They had him testify in his own defense. “It’s not a good situation where the defendant is the star witness,” Rutherford said, “unless there’s a gold nugget that he can pull out or some kind of irrefutable testimony that he can put forward showing matter of factly that, you know, the prosecution just has it wrong.” There was not.
From a defense lawyer’s perspective, is there an easy kind of person to defend against seven federal felonies? Probably not, but Bankman-Fried was an exceptionally vexing challenge to represent, as the lawyers I talked with for this story explained to me. He did not come into this trial with a good hand. Lots of us, and lawyers with relevant experience, were wondering why there was virtually no rumbling of a plea deal before the trial. The simplest answer is that the prosecution never offered one. But there is no indication that Team Bankman-Fried made any attempt to secure one, either. What if it had?
“I can’t think of a situation when someone asked for a plea and it wasn’t given, unless it’s like a death penalty, murder case. So he could have pled and thrown himself at the mercy of the court. People get credit for that,” Maimin said. “It’s almost certain that his sentence would’ve been lower. I don’t know how much lower, but it would’ve been lower.”
Given that Bankman-Fried didn't just go to trial but got on the stand and tried to talk his way out, things might get worse. “There’s a very good chance that the judge is going to find that he committed perjury, which is an extreme affront to judges when that happens in their courtroom,” Maimin, who spent nine years at the Southern District office, said. “And I think it will have as much of an effect on the sentence as anything else.” Bankman-Fried’s sentencing is set for March 28. He faces more than 100 years in prison, though most estimates before the trial were that 10 or 20 years were likelier.
Aggravating that issue is that Bankman-Fried has already irked this judge. The judge revoked his bail after a cascade of pretrial shenanigans became too much. Bankman-Fried’s lawyers and the bench have clashed repeatedly. And the defendant was very, very evasive, in a straightforwardly annoying way, throughout his testimony. Bankman-Fried was more forthcoming when he confidently answered a bunch of questions from journalists in the period in late 2022 between FTX’s collapse and the filing of the federal charges against him. His effort to explain himself on that press tour was, to lawyers, gobsmacking, and came over the reported and emphatic objections of his own lawyers at the time. I’m fairly confident in saying and surmising that his counsel at the time advised him against it and are probably somewhere saying “told you so.”
Indeed: Prosecutors seized on so much of what Bankman-Fried said back then when they cross-examined him. Bankman-Fried sounded different under oath than he did on Twitter Spaces, or in the Financial Times, nearly a year ago. Lying in those media interviews is not necessarily a crime, but Assistant U.S. Attorney Danielle Sassoon accomplished her goal of making Bankman-Fried look like a liar.
That zesty cross-examination was a good encapsulation of what it must be like to represent a defendant like Bankman-Fried. Prosecutors sifted through the rubble of FTX and found plenty of material to work with, but Bankman-Fried made their efforts easier by putting statements on the record in the press that he wouldn’t affirm in the witness box. It was always going to be a brutal defense, and Bankman-Fried repeatedly made it harder for himself and the team representing him.
I asked Maimin if the moves Bankman-Fried’s lawyers made matched what a reasonable lawyer would’ve done. “One hundred percent,” she said. “It is solely the defendant’s choice whether to go to trial, just like it is whether to testify. Nobody can make you go to trial. Your client has been determined to go to trial, where you have dealt the cards you’re dealt, I can’t think of anything else they could do but try to discredit the cooperators and have him take the stand. I think they did everything in their power.” Bankman-Fried did not need good lawyers. What he needed was someone to take away his internet access months—really, years—ago.