Sam Bankman-Fried, co-founder of FTX, found guilty of fraud

“The crypto industry might be new, the players like Sam Bankman-Fried may be new, but this kind of fraud is as old as time, and we have no patience for it,” Mr Williams told reporters outside the courthouse.

Once the darling of the crypto world, Bankman-Fried – who was known for his mop of unkempt curly hair and for wearing shorts and T-shirts rather than business attire – joins the likes of admitted Ponzi schemer Bernie Madoff and Wolf of Wall Street fraudster Jordan Belfort as notable people convicted of major US financial crimes.

US District Judge Lewis Kaplan set Bankman-Fried’s sentencing for March next year. The Massachusetts Institute of Technology graduate could face decades in prison.

His defence lawyer Mark Cohen said in a statement that he was “disappointed” but respected the jury’s decision.

“Mr Bankman-Fried maintains his innocence and will continue to vigorously fight the charges against him,” he said.

After Judge Kaplan left the courtroom, Mr Cohen put his arm around Bankman-Fried as they spoke at the defence table. As Bankman-Fried was led away by members of the US Marshals service, he turned around and nodded at his parents, Stanford Law School professors Joseph Bankman and Barbara Fried, who were seated in the courtroom audience’s front row.

Ms Fried looked toward him and crossed her arm across her chest. Bankman-Fried is set to go on trial next March on a second set of charges brought by prosecutors earlier this year, including for alleged foreign bribery and bank fraud conspiracies.

In this courtroom sketch, Sam Bankman- Fried’s parents react to the jury verdict.  AP

Bankman-Fried’s was the first of several blockbuster cases Mr Williams brought against former high-flying cryptocurrency executives to go to trial. Several crypto companies went bankrupt last year after the prices of bitcoin and other digital assets collapsed following a years-long boom.

Prosecutors argued during the trial that Bankman-Fried siphoned money from FTX to his crypto-focused hedge fund, Alameda Research, despite proclaiming on social media and in television advertisements that the exchange prioritised the safety of customer funds.

Alameda used the money to pay its lenders and to make loans to Bankman-Fried and other executives – who in turn made speculative venture investments and donated upwards of $US100 million to US political campaigns in a bid to promote cryptocurrency legislation the defendant viewed as favourable to his business, according to prosecutors.

Bankman-Fried took the calculated risk of testifying in his own defence over three days near the close of trial after three former members of his inner circle testified against him. He faced aggressive cross-examination by the prosecution, often avoiding direct answers to the most probing questions.

He testified that while he made mistakes running FTX, such as not formulating a risk-management team, he did not steal customer funds.

He said he thought Alameda’s borrowing from FTX was allowed and did not realise how large its debts had grown until shortly before both companies collapsed.

“We thought that we might be able to build the best product on the market,” Bankman-Fried testified. “It turned out basically the opposite of that.”

Prosecutors had a different view.

“He didn’t bargain for his three loyal deputies taking that stand and telling you the truth: that he was the one with the plan, the motive and the greed to raid FTX customer deposits – billions and billions of dollars – to give himself money, power, influence,” prosecutor Danielle Sassoon told the jury on Thursday.

“He thought the rules did not apply to him. He thought that he could get away with it.”

The jury heard 15 days of testimony.

Former Alameda CEO Caroline Ellison and former FTX executives Gary Wang and Nishad Singh, testifying for the prosecution after entering guilty pleas, said he directed them to commit crimes, including helping Alameda loot FTX and lying to lenders and investors about the companies’ finances.

The defence argued the three, who have not yet been sentenced, falsely implicated Bankman-Fried in a bid to win leniency at sentencing. Prosecutors may ask Judge Kaplan to take their co-operation into account in deciding their punishment.

Bankman-Fried has been jailed since August after Kaplan revoked his bail, having concluded he likely tampered with witnesses.

Reuters