Timber merchant Daniel Challis, 24, gulped down the pet as a 'neknominate' challenge after a night of drinking.
Pal Cheryl Stevens filmed the stunt and posted a clip on Facebook, which was spotted by the RSPCA.
The pair were both charged with causing unnecessary suffering to the animal and failing in their duty of care.
They both denied the charges, insisting they believed the fish was dead.
But Kevin Withey, prosecuting on behalf of the RSPCA, said the video showed it was 'crystal clear' that the fish was alive, describing the incident as a 'bravado exercise'.
He told Torquay Magistrates' Court in Devon: "You can see the fish moving in the pint glass and you can see it moving in the accused's hand.
A man filmed swallowing a live goldfish is facing jail after being convicted of animal cruelty
I thought it was funny at the time but I took it down when a friend said it was upsetting
"His hand is rock steady and the fish is moving."
The video was filmed in an office above the Crazy Horse bar in Paignton, Devon, on March 18 last year.
Mr Withey told the hearing: "This was a bravado exercise called neknominate, a craze where someone dares to drink things. It becomes more bizarre and unpleasant."
Daniel Challis gulped down the pet as a 'neknominate' challenge after a night of drinking
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Giving evidence, Challis said that he, Stevens and other friends joined the goldfish's owner Cameron Nimmo at the bar after finishing work.
Mr Nimmo, who works at the Crazy Horse, kept the fish in the venue's office.
"We noticed the fish was dead and put it in a pint glass," said Challis.
Cheryl Stevens filmed the stunt and posted a clip on Facebook
"Someone said 'eat it' and we had been laughing and drinking and thought it would be a funny thing to do.
"I truly believed the fish was dead. It was not the most sensible of things to do."
Stevens, 27, told the court: "Someone dared Dan to down it. I took the video, I posted it on Facebook.
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Handout photo issued by the Orangutan Foundation of Aan, a critically-endangered orangutan who was blinded after being shot more than 100 times with an air rifle. Aan is to undergo an operation that could restore her sight.
"I thought it was funny at the time but I took it down when a friend said it was upsetting."
Mr Nimmo said that he had been told by a colleague earlier in the day that his goldfish had died.
"I believed it was dead when Dan swallowed it," he added. "I wouldn't have let him do it if it was alive."
The video was filmed in an office above the Crazy Horse bar in Paignton
The prosecution called on independent vet David Martin as an expert witness.
Mr Martin told the court that the video showed the goldfish was floating in the middle of a pint glass before it was swallowed – a sign that it was alive.
"When the hand goes into the glass the fish moves away which you would expect from a live animal," he added.
Challis was found guilty of cruelty along with his friend Stevens
"The goldfish is clearly moving in Mr Challis' hand."
Challis and Stevens were found guilty of cruelty but cleared of the further charge of failing in their duty to protect the fish.
They were warned they could be jailed when they are sentenced at Plymouth Magistrates' Court on February 3 and released on unconditional bail.