Key Takeaways
- FTX founder and former CEO Sam Bankman-Fried was found guilty by a jury on seven counts including fraud and money laundering.
- Five of those counts carry a maximum of 20 years of prison sentence each, while two others could earn him maximum jail time of 5 years.
- Bankman-Fried's sentencing will take place in March next year, he also faces a separate trial on charges of foreign bribery.
- Misuse of FTX customer money funded trading, lavish personal purchases and substantial political contributions among others.
- FTX filed for bankruptcy last November, and the new management is still working on a plan to refund customers who lost their funds on the exchange.
Sam Bankman-Fried, "King of Crypto", founder and former CEO of crypto exchange FTX, was found guilty by a jury on seven counts including fraud and money laundering after a month-long trial. This verdict comes almost a year after the collapse of FTX, once valued at $32 billion.
What He Was Found Guilty Of
The biggest accusations against Bankman-fried involved misuse of FTX customer funds. He was charged with siphoning customer money from the FTX exchange to his cryptocurrency hedge fund, Alameda Research, and using it to fund a lavish personal lifestyle as well as make political contributions.
A report by crypto news outlet CoinDesk almost a year ago to the day raised suspicion about FTX's liquidity. That set off a chain of events that brought the exchange down in a matter of days.
How Much Jail Time He Could Face
Bankman-Fried, was convicted of two counts of wire fraud conspiracy, two counts of wire fraud, and one count of conspiracy to commit money laundering, each of which carries a maximum sentence of 20 years in prison. He was also found guilty on one charge of conspiracy to commit commodities fraud and one count of conspiracy to commit securities fraud that each carry up to five years of prison time.
The sentencing for these charges will take place in March next year. That's also when Bankman-Fried will face another trial for five additional charges, including bribery.
The disgraced crypto founder has been in prison since August, when he had his bail revoked for witness tampering.
He Took The Stand, As Did His Closest Aides
Sam Bankman-Fried took the stand in his trial but had to endure testimony from some of his former closest aides. FTX co-founder Gary Wang said SBF plugged holes in his Alameda fund with FTX customer money from the early days of the exchange. Wang added that losses at the hedge fund eventually became too large to cover up.
Bankman-Fried said he was "very surprised" when he learned of an $8 billion shortfall at Alameda. The crypto founder's ex-girlfriend and executive at FTX, Caroline Ellison, also took the stand, saying he directed her to funnel $14 billion of FTX funds to the investment firm.
FTX Customers Lost Billions, Haven't Got a Refund Yet
The collapsed crypto exchange has announced a new plan to send 90% of distributable funds—money it has recovered—to its former customers. However, the exchange had a shortfall of $8.7 billion, with only $6.9 billion being recovered back by the new management, led by bankruptcy expert John J. Ray III.
Ray oversaw the bankruptcy of the infamous energy firm Enron but said that the FTX collapse was the worst he had seen in his career, due to a "complete failure of corporate controls." Bankman-Fried's largesse included using corporate funds to purchase homes and other personal items for employees and advisors in the Bahamas, sponsoring the FTX Arena in Miami, a Formula One team, and dishing out $93 million in political donations.
Do you have a news tip for Investopedia reporters? Please email us at
