FTX founder Sam Bankman-Fried is guilty of fraud

Photo illustration by Cath Virgina / The Verge

The trial could have huge implications for the crypto industry. Stay up to date as The Verge covers the trial from the Manhattan court.

Sam Bankman-Fried, the founder of failed cryptocurrency exchange FTX, has been found guilty of seven counts including wire fraud, conspiracy to commit wire fraud, and conspiracy to commit money laundering.

Bankman-Fried founded FTX because he was frustrated with other exchanges used by his crypto trading firm Alameda Research, according to a profile from FTX investors Sequoia Capital. But FTX was a fraud “from the start,” the Securities and Exchange Commission alleges.

Bankman-Fried was accused of misappropriating and embezzling FTX customer deposits, according to the superseding indictment. According to the indictment, despite “spending millions of dollars to promote FTX and its sister company FTX.US as safe places to invest in cryptocurrency… FTX’s finances contained a multi-billion-dollar deficiency caused by his own misappropriation of customer funds from the exchange.” The customer money was used by Bankman-Fried to, variously, make billions of dollars of investments, buy $200 million of real estate, and repay Alameda’s lenders, according to the indictment.

The entire scheme came to light after CoinDesk published a blockbuster article about Alameda’s balance sheet. It showed that FTX and Alameda were very closely linked and that a lot of the balance sheet consisted of the FTT token, which was issued by FTX. That article led to Binance CEO Changpeng “CZ” Zhao — a former investor in FTX — saying he would sell his holdings of FTT. FTX’s bankruptcy and Bankman-Fried’s resignation from the company followed.

One year to the day after CoinDesk reported on the balance sheet, a New York jury returned a guilty verdict against Bankman-Fried on all of the charges he faced.

You can follow along below for all the latest updates and regular updates from the trial.

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