Sam Bankman-Fried’s fate is now in the hands of 12 jurors, setting up a dramatic conclusion to a trial that captivated the crypto world for the last five weeks.
The key question the nine women and three men are likely considering after beginning their deliberations at 3:14 pm ET Thursday: Did the 31-year-old founder of the cryptocurrency exchange FTX intentionally defraud customers, lenders, and investors?
Prosecutors argued that’s exactly what happened. Bankman-Fried, they say, deliberately stole $14 billion in customer deposits from the exchange in a scheme that he carried out with three of his top executives.
The group, prosecutors claimed, allowed Bankman-Fried’s sister crypto trading firm Alameda Research "secret" backdoor access to FTX’s customer deposits, then spent the money on investments, loan repayments, political donations, and real estate.
"It’s about perception. It’s about stealing. It’s about greed," Assistant US Attorney Nicolas Roos said, describing the government's accusations during closing arguments. "He knew Alameda was taking money from customers, and that makes him guilty of fraud."
Bankman-Fried, on the other hand, argued that management screwups — and not fraud — were to blame for the undoing of the cryptocurrency exchange. FTX filed for bankruptcy in November 2022.
In a risky gamble, he took the stand for a dramatic three days at the trial’s end. He repeatedly distanced himself from certain company decisions and actions, arguing that he thought Alameda borrowing and using funds from FTX was "permissible" and that any "borrows" would be reflected on its balance sheets as liabilities to FTX.
He said he didn’t know FTX customer funds were being used to pay off Alameda loans and trading debts until October 2022, roughly one month before the exchange collapsed.
'That's not a crime'
Bankman-Fried’s defense lawyer, Mark Cohen, said in his closing argument Wednesday that no witnesses testified that Bankman-Fried told them to break the law. His client, he said, didn’t commit crimes and had been unfairly portrayed by the prosecution as a "villain."
Poor business decisions, he said, do not equate with fraud. If jurors believe Bankman Fried acted in good faith, he said, then he can't be found guilty of any charges.
"We’ll agree that there was a time when Sam was probably the worst-dressed CEO in the world, and had the worst haircut," Cohen said. "That made his life messy,” he added. "But that’s not a crime."
Bankman-Fried faces seven separate criminal charges ranging from wire fraud to money laundering. He also faces even more legal jeopardy in the year ahead. He is scheduled to face a separate set of criminal charges in another trial due to begin in March.
Convictions on all counts could mean a sentence of more than 100 years in federal prison.
Some of the most dramatic moments in his current trial came when Assistant US Attorney Danielle Sassoon confronted Bankman-Fried on Monday and Tuesday, asking him to explain his many statements to reporters and what he did in 2022 when it became clear FTX customer funds had been used to pay off Alameda loans and trading debts.
"Did you fire anyone for spending $8 billion of customer deposits?" Sassoon asked.
"No," Bankman-Fried said.
Many times on the stand Bankman-Fried responded to questions from prosecutors with “not sure” or “I don’t recall” or “I don’t remember.” At one point the judge reprimanded him: “Just answer the question,” Judge Lewis Kaplan said.
Roos told jurors Wednesday during his closing argument that Bankman-Fried "came up with a tale that was conveniently put together to exclude himself from the fraud" at FTX. “Over three days he took the stand and he lied."
He pointed to six points in time as evidence that Bankman-Fried could have exposed Alameda’s "giant" liabilities and secret use of customer funds, yet chose instead to double down on its risk.
In September 2021, the prosecutors said, Bankman-Fried directed Alameda CEO Caroline Ellison to buy back roughly $2 billion in FTX equity from its rival exchange Binance, even though FTX’s revenues were $1 billion.
Bankman-Fried, they said, also commented on a spreadsheet later that same year on which Ellison calculated Alameda’s net asset value to negative $2.7 billion.
Prosecutors contend that Bankman-Fried also lied on the stand when he testified that he didn’t know about Alameda’s use of customer funds until October.
All three of his top deputies, Ellison, Nishad Singh, and Gary Wang, they said, testified that they met with Bankman-Fried to discuss Alameda’s $10 billion deficit in June 2022.
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