The criminal trial of Sam Bankman-Fried (SBF) — founder of FTX, once the world’s second-largest crypto exchange — was one of the most consequential white-collar prosecutions of the decade. SBF was convicted on all seven counts of fraud and conspiracy in October 2023, and sentenced to 25 years in federal prison in March 2024. The case exposed how FTX had secretly funneled billions in customer deposits to Alameda Research, SBF’s trading firm, to fund investments, political donations, and luxury real estate.
Pre-Trial: The Collapse (November 2022)
The collapse began November 2, 2022 when CoinDesk published a leaked Alameda Research balance sheet showing the firm held $5.8 billion in FTT (FTX’s own token) as a primary asset — raising questions about the circular nature of SBF and Alameda’s claims. Binance CEO CZ announced he was selling Binance’s FTT holdings, triggering a bank run. Within 72 hours:
- $6 billion in customer withdrawals were filed
- FTX halted withdrawals November 8
- SBF resigned November 11; John J. Ray III appointed as new CEO
- FTX filed for Chapter 11 bankruptcy with an $8 billion customer-fund shortfall
SBF was arrested in the Bahamas on December 12, 2022 and extradited to the US.
Key Government Witnesses
Caroline Ellison (former Alameda CEO, SBF’s ex-girlfriend): The most damning witness. She testified that SBF had directed her to use FTX customer funds for Alameda trading and to pay back Alameda’s lenders during the 2022 credit crisis. She pleaded guilty to fraud and agreed to cooperate in exchange for potential leniency.
Gary Wang (FTX co-founder): Testified that SBF had him build a secret backdoor in FTX’s accounting allowing Alameda to borrow unlimited funds from customer deposits without triggering risk controls. Pleaded guilty and cooperated.
Nishad Singh (FTX head of engineering): Testified about the internal culture at FTX and confirmed the backdoor existed. Pleaded guilty and cooperated.
Ryan Salame (FTX co-CEO Bahamas) also pleaded guilty separately.
Trial Proceedings
Start date: October 3, 2023
Conclusion: October 26, 2023 (SBF found guilty on all 7 counts in ~4 hours of deliberation)
Counts:
- Wire fraud on FTX customers
- Wire fraud on Alameda lenders
- Securities fraud on equity investors
- Commodities fraud
- Money laundering conspiracy
- Campaign finance violations (filing improper political donations)
- Conspiracy to commit money laundering
Defense strategy: SBF argued he had made good-faith business decisions and that any misuse of funds was due to accounting errors, not intentional fraud. He testified in his own defense for three days. Jurors were unconvinced.
Sentencing
On March 28, 2024, Judge Lewis Kaplan sentenced SBF to 25 years in federal prison — significantly below the government’s requested 40–50 years but well above the 5–6.5 year range SBF’s defense had sought. Judge Kaplan cited the unprecedented scale of the harm and SBF’s lack of genuine remorse.
SBF was also ordered to forfeit approximately $11 billion.
Industry Impact
The FTX collapse and trial triggered:
- Mass institutional withdrawal from crypto in Q4 2022
- Regulatory acceleration in the US (SEC increased enforcement, FIT21 Act debate)
- The bankruptcy proceedings resulted in a surprise outcome: FTX creditors were eventually set to receive 100 cents on the dollar plus interest after crypto’s 2023–2024 recovery boosted the estate’s holdings
Related Terms
Sources
- DOJ Press Release (2023). “Samuel Bankman-Fried Convicted of Federal Fraud and Conspiracy Charges.” US Department of Justice.
- Ray, J.J. (2022). FTX Chapter 11 Bankruptcy Filing — CEO Declaration. SDNY Bankruptcy Court.
- Ellison, C. Testimony Transcript, US v. Bankman-Fried (2023). SDNY.
- Zeke Faux (2023). Number Go Up: Inside Crypto’s Wild Rise and Staggering Fall. Crown.
- MacKenzie, M. & Holt, N. (2024). “Judge Sentences Bankman-Fried to 25 Years.” Financial Times, March 28, 2024.