Wall Street investor, Bill Hwang, of Archegos Capital Management has been found guilty of fraud and market manipulation by a jury in New York.
Hwang's deputy at Archegos and co-defendant, Patrick Halligan, was also found guilty on the three counts he faced.
The Archegos hedge fund collapsed three years ago, leading to billions of dollars in losses for several major banks.
Founder Hwang, who was also chief financial officer, was charged with fraud by US federal authorities, accusing the firm of pretending a US$1.5 billion portfolio had ballooned to US$36 billion in less than a year.
Hwang was accused of lying to lenders as he secretly amassed large bets on several companies, using derivative swaps securities that are traded over the counter and therefore have limited regulatory disclosure requirements.
Sentencing has been scheduled for 28 October.
"Hwang and Halligan lied about Archegos’s positions in these companies and just about every other materially important metric investment banks would use in determining the firm’s creditworthiness," US attorney Damian Williams told media after the verdict.
"In doing so, Hwang and Halligan were able to fraudulently inflate a $1.5 billion portfolio into a $36 billion portfolio," he added.
Hwang pled not guilty to one count of racketeering conspiracy, three counts of fraud and seven counts of market manipulation, while Halligan pleaded not guilty to one count of racketeering conspiracy and two counts of fraud.