Live updates: Sam Bankman-Fried found guilty in fraud trial

For the past year, the crypto industry has been working overtime to try to crawl out from the shadow of FTX’s implosion.

Its bankruptcy became a financial and PR nightmare for an industry that has struggled to shake its association with fraud.

Outwardly, many crypto advocates say they wanted to see Sam Bankman-Fried prosecuted, arguing his firm was the bad apple sullying the industry.

But the headlines are hardly a PR win for crypto firms. While the industry has had some recent regulatory wins in court, it remains a largely unknown and haphazardly regulated space that mainstream investors are wary of.

Now, add Bankman-Fried to a growing list of people who made a lot of money in crypto before losing it (or at least be indicted for it) in dramatic fashion: Heather Morgan, aka Razzlekhan, and Ilya Lichtenstein; Celsius’s Alex Mashinsky; or Karl Greenwood, one of the founders of the OneCoin scheme who was sentenced to 20 years in prison.

Judge Lewis Kaplan set Sam Bankman-Fried’s sentencing hearing for March 28. He is expected to remain in a federal jail in Brooklyn while he awaits sentencing.

His legal headaches are far from over.

A statement from his lawyer said “Bankman-Fried maintains his innocence and will continue to vigorously fight the charges against him.”

Meanwhile, a second trial on five additional charges that were severed from these proceedings is scheduled for March, though Judge Kaplan asked prosecutors to decide by February 1 whether that will proceed.

Former billionaire Sam Bankman-Fried was found guilty of seven counts of fraud and conspiracy. Here's what that means.

Each count pertains to a specific kind of crime committed against a specific group of alleged victims. 

In this case, there are charges related to alleged crimes committed against FTX's customers and others related to sister company Alameda Research's lenders, plus a money-laundering charge that refers to an alleged cover-up.

Here's what the seven counts mean: 

Crimes against FTX customers: Counts one, two and six

Count one: Wire fraud on customers of FTX

Wire fraud is a kind of arcane-sounding name for when someone uses electronic communications — email, texts, tweets — to further a criminal act. The government says Bankman-Fried knowingly and willfully participated in a scheme to steal from customers. 

Fraud is a broad term but in general refers to a plan to deprive another person of money or property through false or deceptive means. 

Count Two: Conspiracy to commit wire fraud on customers of FTX

This is the same as the above, but it involves at least one other person as a co-conspirator. In this case, three of the government's cooperating witnesses have pleaded guilty to being co-conspirators with SBF in the hopes of securing a lighter sentence. 

Count Six: Conspiracy to commit commodities fraud on customers of FTX 

This count refers to knowingly participating in a scheme involving the sale of commodities (or crypto swaps) under the purview of the US derivatives regulator, the Commodity Futures Trading Commission, or CFTC. 

In this case, cryptocurrencies like bitcoin and ethereum are being treated as commodities subject to CFTC oversight. 

Fraud against lenders: Counts three, four and five 

Counts three and four: Wire fraud and conspiracy to commit wire fraud on lenders to Alameda Research 

These are similar to counts one and two (fraud against customers), but refers to the companies that gave loans to Alameda. 

Count Five: Conspiracy to commit securities fraud on investors in FTX 

This charge refers to a scheme to defraud or make false statements about a security. In this case, the security is FTX stock. (While not a publicly traded firm, FTX raised capital by selling equity in the company to investors.)

The government contends that Bankman-Fred lied to investors about the financial ties between FTX and Alameda. 

Cover-up: Count seven

Count Seven: Conspiracy to commit money laundering

Money laundering, broadly, is concealing the source of money that's obtained from illicit activities — such as embezzlement or gambling. 

In remarks made outside the Manhattan courthouse Thursday, US Attorney Damian Williams lauded the jury's decision to convict Sam Bankman-Fried, saying the government has "no patience" for fraud and corruption.

"These players like Sam Bankman-Fried might be new, but this kind of fraud, this kind of corruption, is as old as time," he said.

Williams added that the case should serve as a warning "to every single fraudster out there who thinks that they're untouchable, or that their crimes are too complex for us to catch."

"Those folks should think again and cut it out. And if they don't, I promise we'll have enough handcuffs for all of them," he said.

Convicted former FTX CEO Sam Bankman-Fried is not giving up the fight after being found guilty of seven counts of fraud.

“We respect the jury’s decision," said Mark Cohen, lead counsel, in a statement. "But we are very disappointed with the result. Mr. Bankman-Fried maintains his innocence and will continue to vigorously fight the charges against him."

Sam Bankman-Fried's parents, Joseph Bankman and Barbara Fried, sat in the second row of the galley Thursday and tightly hugged each other through the reading of each of the counts. 

As each, "guilty," was read out loud, Bankman sank his head deeper and deeper into his lap, his face barely visible. 

Fried had her arm around her husband and kept squeezing his shoulder, as did he to her. 

Her jaw quivered and she pressed the palms of her hands to her cheeks as she listened to the verdict, staring directly at her son, eyes cast downward and frowning. 

When Bankman-Fried initially got up to face the jury, both parents sank their heads down, with Bankman keeping his head down nearly the entire time. 

After the verdict was read, Bankman-Fried appeared shell-shocked. He did not turn around to see his parents until he was close to the exit door and gave them a somber smile as his mother pounded her hand into her chest on her heart, and then sank her face into her husband's shoulder. 

US District Court Judge Lewis Kaplan announced that convicted former FTX CEO Sam Bankman will be sentenced on March 28, 2024.

Meanwhile, Bankman-Fried will return to the Metropolitan Detention Center in Brooklyn, where he’s been held since August.

The MDC is a far cry from Bankman-Fried’s Bahamas compound and from his parents’ leafy Palo Alto neighborhood where he’d been under house arrest since his arrest in December.

Located on the industrial waterfront of Brooklyn’s Sunset Park neighborhood, the MDC has earned a reputation as one of the worst jails in America. Politicians and activists have held the facility up as a testament to a crumbling criminal justice system. 

Bankman-Fried shares his space with some other high-profile detainees, including the former president of Honduras, who was indicted on cocaine trafficking charges last year, a person familiar with the matter told CNN.

Bankman-Fried is also “friendly” with Genaro García Luna, the former head of Mexico’s FBI, who is awaiting sentencing for drug trafficking, this person said. 

When his trial began, observers quickly noted changes to Bankman-Fried’s appearance. He seemed to have lost weight and, most surprising, his trademark wild locks were gone, shorn into a tight crew haircut.

The haircut, the person confirmed, was courtesy of a fellow MDC resident.

Faced with a coterie of high-level witnesses aligned against him, former FTX CEO Sam Bankman-Fried's defense was challenged from the start.  

During the trial, his defense counsel appeared to stumble in cross-examining those witnesses.   

Lawyers typically advise their clients in criminal cases not to testify, as it opens them up to potentially damning cross-examination from prosecutors. But multiple legal experts said that Bankman-Fried's case was an exception. He had no allies left to counter the business partners who’d turned on him. Taking the stand was a Hail Mary – the kind of high-stakes risk that Bankman-Fried had built his career on.  

"Bankman-Fried has an outsized appetite and tolerance for risk," said Howard Fischer, a  partner at the law firm Moses Singer and a former SEC attorney. 

"Testifying is hard work. It is not just getting the details of the story right, but learning how to present yourself under questioning, and dealing with the stress of cross-examination," Fischer said. "Optimally, one would want to engage in months of practice before mock juries before taking the stand." 

But Bankman-Fried's trial prep was complicated significantly after Judge Lewis Kaplan revoked his bail in August, after prosecutors said the defendant leaked documents about ex-girlfriend Caroline Ellison to the New York Times. That was a final straw, following other instances of alleged witness tampering, for Kaplan, who remanded Bankman-Fried to a federal jail in Brooklyn, New York, where his access to lawyers was more limited. 

Former FTX CEO Sam Bankman-Fried looked sunken as the jury's guilty verdict was read out. After the jury was released, he stood, head bowed and shaking as his lawyer spoke in his ear.

A few feet behind him, his parents stood watching. As Bankman-Fried was escorted out of the room, he turned back and smiled at his parents.

His father, Joe Bankman, put his arm around his wife's shoulders. As their son left the courtroom, Barbara Fried broke down in tears.