The Diddy trial is mostly in the books after the jury acquitted him of the most serious charges -- racketeering and sex trafficking -- and prosecutors are coming out looking like huge losers.

Diddy learned his fate Wednesday when a jury of his peers reached a verdict in his criminal case ... and they only found him guilty on a pair of lesser charges ... two counts of the Mann Act -- transportation for prostitution across state lines.

The Bad Boy Records founder skated on the bigger charges and there's no way prosecutors would have brought this case if all they had on Diddy was a prostitution offense.

Diddy was found guilty on two of five counts in his federal trial, which could land him in prison for the next 20 years, and he's not getting out on bail prior to sentencing ... but his team of lawyers are declaring victory.

The music mogul's co-lead attorney Marc Agnifilo said Diddy and the jury system won Wednesday because the jury in his criminal trial found him not guilty of racketeering and sex trafficking.

Agnifilo said RICO and sex trafficking trials are like fighting fire-breathing dragons ... and he says Diddy slayed this dragon. He was only found guilty of lesser charges related to prostitution.

2:55 PM PT -- Diddy's attorney Marc Agnifilo and Judge Arun Subramanian went back and forth after bail was denied ... with Agnifilo arguing Diddy fought back in self-defense during the alleged fight that went down with "Jane" in June 2024.

Agnifilo tried an emotional appeal to the judge ... noting Diddy's kids are in the courtroom -- and, his twin daughters have already lost their mother, Kim Porter. However, the judge wasn't swayed. The hearing on expedited sentencing is set for July 8.

Independence Day did not come early for Sean "Diddy" Combs ... he was hoping for a taste of freedom after spending the past 9 months in a Brooklyn jail ... but he was just denied bail and will remain in custody pending sentencing in his criminal case.

As you know, a jury found Diddy not guilty of the three most serious charges -- two counts of sex trafficking and one of racketeering. They found him guilty on two counts of the Mann Act -- transportation for prostitution across state lines.

The defense immediately asked the judge to have Diddy released on $1 million bail while awaiting sentencing and appeal. Prosecutors argued Diddy qualified as a no-bail convict because of potential violence and flight risk.

We've got one staple of a freak-off outside the courthouse where Diddy just skated on the most serious criminal charges against him ... his fans are lathering themselves up with baby oil -- and it's all on video.

It's pure madness on the streets of Manhattan right now ... a bunch of folks have gathered to celebrate the Diddy trial verdict, and they busted out the baby oil.

One woman's nipples even made an appearance ... with her oiled-up breasts spilling out of her top.

Sharay Hayes -- the exotic male dancer nicknamed "The Punisher" who testified during Diddy's trial -- says he thinks the jury made the right call on Diddy's verdict ... one he thinks he might have helped them arrive at.

We caught up with Hayes just hours after the jury found Diddy guilty on two counts of transportation to engage in prostitution -- which carries a maximum combined 20-year sentence -- but found him not guilty on the more serious sex trafficking and racketeering charges.

Sharay says he always saw this case through the lens of a toxic relationship filled with domestic violence issues ... but, he didn't think the prosecution's claims of sex trafficking held up.

Diddy might be headed off to prison, but his image will recover given a little time ... so says prominent defense lawyer Jose Baez.

The lawyer who repped Casey Anthony and Aaron Hernandez joined us on "TMZ Live" Wednesday -- hours after Diddy was found guilty on two counts of transportation to engage in prostitution and not guilty of racketeering and sex trafficking.

Jose says Diddy's going to "bounce back" from this ... especially in the music industry, where he guesses artists will be willing to overlook his convictions if it means making a hit record.

Ray J returned to "TMZ Live" on Wednesday to remind everyone he's a card-carrying member of Team Diddy -- and is even disputing the 2 fed counts Puff was found guilty of!!!

The way Ray J sees it ... Diddy was entangled in consensual freak-offs and should NOT be punished by jail time.

Prosecutors are actively arguing that Diddy is an ultraviolent menace to society -- but Ray J's predicting his homie's prison release by the end of business day, where he'll charter a plane to Miami and exhale for the 4 of July weekend!!! (We learned later in the day the judge denied bail, and Diddy will remain locked up until his sentencing hearing, scheduled for October.)

Joe Tacopina is taking a victory lap at the expense of federal prosecutors ... because he's always said the racketeering and sex trafficking charges against Diddy didn't add up -- and a jury agreed.

The famous defense attorney joined us on "TMZ Live" Wednesday and ripped prosecutors for bringing what he says were trumped-up charges against Diddy.

Joe, who's been banging this drum for months now on our weekly series on Tubi, "TMZ Presents: United States V. Sean Combs: Inside the Diddy Trial," says the evidence and testimony never pointed towards racketeering or sex trafficking.

Cassie's worried about what Diddy might do to her if the judge lets him out on bail prior to his sentencing ... and, she's asking the judge to make sure she never finds out.

The singer-songwriter submitted a letter to the court Wednesday requesting the judge not allow Diddy to head back into the world before he's sentenced for his conviction on two counts of transportation to engage in prostitution.

Cassie and her attorney, Douglas Wigdor, say Diddy is "likely to pose a danger to the victims who testified in this case" -- including Cassie herself.

Funk Flex isn't letting Cassie off the hook despite her immunity in Diddy's RICO trial ... considering the "Me & U" singer received a huge payout in exchange for her silence years ago!!!

On Wednesday, the Hot 97 disc jock exploded on Cassie and her attorneys ... picking apart her "victim" label, while also acknowledging she and her family experienced a hardship.

Flex recalls seeing Cassie give off good energy at a young age, but thinks the lines blurred once her relationship with Diddy got underway.

Diddy's supporters are beginning to draw lines in the sand -- and Jay Electronica's standing firmly on the side that wants the Bad Boy mogul free ASAP!!!

TMZ Hip Hop linked up with Jay-E on Wednesday as he casually blended in amid the calamity outside the courthouse in Manhattan ... although his two huge Great Danes most definitely stood out!!!

His reaction was tamer than most -- Jay's mostly a man of few words, but he tells us he was outside the building to support his longtime pal Diddy, and he never had a doubt his boy would come out on top.

Diddy's son Christian "King" Combs was bursting with energy after learning his dad was acquitted of racketeering and sex trafficking charges, and burned off his excitement with a round of push-ups!!!

KC was spotted a couple blocks away from the courtroom after the verdict on Wednesday, and you can see him beaming with enthusiasm as he thanked fans for their thoughts and prayers.

You can also hear the sounds of his recently released joint EP with Kanye West, "Never Stop" ... a project that has new meaning now that Diddy could be coming home soon if he's granted bail.

Prosecutors are vehemently opposed to letting Diddy out on bond ... they say his convictions for the Mann Act make him a violent criminal.

The feds just fired off a letter to Judge Arun Subramanian outlining the reasons why they say he should remain in custody pending sentencing for his conviction on two counts of transportation of prostitutes across state lines.

In the docs, obtained by TMZ, prosecutors say Diddy is trying to use the Bail Reform Act to get released on bail pending sentencing ... but they say detention is mandatory for Diddy based on the crimes for which he was found guilty.

The Diddy case started with prosecutors claiming he was a racketeer and sex trafficker who was blowing up cars and distributing drugs ... but now it's been reduced to transporting prostitutes across state lines -- and his team says that's not enough to keep him locked up before sentencing.

Diddy's legal team just fired off a letter to Judge Arun Subramanian outlining the reasons why they say he should be released from federal custody.

In the docs, obtained by TMZ, Diddy's defense says the jury "unambiguously rejected the government's allegations that Mr. Combs ran a years-long criminal enterprise or engaged in sex trafficking -- the core of the government's case."

Diddy had a message for his family after skating on the most serious charges in his criminal trial ... "I'm coming home."

After the not guilty verdicts for racketeering and sex trafficking were read in court Wednesday, Diddy turned around in his seat and nodded to his family and told them he would see them soon.

Diddy's mom, Janice Combs, was seated behind him in the gallery ... along with his three daughters and his sons Christian, Justin and Quincy ... plus Dana Tran, the mother of his youngest child, and a bunch of extended family members.