Crypto entrepreneur Sam Bankman-Fried was sentenced to 25 years for defrauding FTX investors. Co-founder of FTX Sam Bankman-Fried was sentenced for a massive fraud that unraveled with the collapse of FTX, once one of the world’s most popular platforms for exchanging digital currency. FTX founder will serve his term in prison after being convicted of defrauding his customers, investors, and lenders.
Sam Bankman-Fried who presided over the largest crypto collapse in history was sentenced on Thursday in a Manhattan federal court. This sentencing was from U.S. Judge Lewis Kaplan, who presided over Bankman-Fried’s trial last fall.
FTX founder convicted
He faced up to 110 years. Prosecutors argued for a sentence of 40 to 50 years, while Bankman-Fried’s lawyers asked for six and a half years.
Sentences for white collar crimes have varied in recent years, from 150 years for Bernard Madoff to 11 years for Elizabeth Holmes.
The 32-year-old Bankman-Fried, in his final statement before the judge, said what happened at FTX “haunts me” and that “I made a lot of mistakes.”
As CEO, “I was responsible at the end of the day.”
Dozens of FTX victims, including those who said they lost their life’s savings due to the demise of the cryptocurrency exchange, submitted letters urging Kaplan to impose a harsh sentence.
Sam Bankman-Fried fraud sentencing
The federal sentencing guidelines, while advisory rather than mandatory, suggest prison term enhancements that lengthen sentences as victims’ losses increase.
Kaplan had to weigh the billions that prosecutors say Bankman-Fried stole from FTX customers against claims made by FTX that those who were harmed may be fully repaid via FTX’s bankruptcy.
Kaplan said the sentence reflected “that there is a risk that this man will be in position to do something very bad in the future. And it’s not a trivial risk at all.” He added that it was “for the purpose of disabling him to the extent that can appropriately be done for a significant period of time.”
Kaplan further ordered Bankman-Fried to forfeit over $11 billion. He also he would advise the Federal Bureau of Prisons to send him to a medium-security prison or less near the San Francisco area because he’s unlikely to be a physical threat to other inmates or prison staff, and his autism and social awkwardness would make him vulnerable to other inmates in a high-security location.
Sam Bankman-Fried FTX mislead customers
In January, lawyers for the defunct exchange told a Delaware bankruptcy court judge that a plan for FTX to repay customers and general unsecured creditors in full was “within reach.”
But the judge was not sympathetic to that claim, calling the assertion “misleading” and “speculative.”
Kaplan also had some strong words about Bankman-Fried before delivering his sentence, citing the “brazenness” of his actions, his “exceptional flexibility with the truth” and “his apparent lack of any remorse.”
“He knew it was wrong,” the judge added.
Rise and fall of Sam Bankman-Fried
The sentencing of Bankman-Fried completes a dramatic fall for a onetime billionaire who ran the world’s second-largest crypto exchange and was the face of a boom in digital assets during the early years of the pandemic.
His empire imploded in late 2022 as FTX filed for bankruptcy and he was arrested by authorities in the Bahamas.
Sam Bankman-Fried legal case
His trial last fall captivated the financial world. A 12-person jury eventually sided with prosecutors who argued that Bankman-Fried deliberately stole up to $14 billion in customer deposits from his cryptocurrency 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.
“He spent his customers’ money, and he lied to them about it,” prosecutor Nicolas Roos said in the government’s closing argument.
The other three FTX executives, Alameda CEO Caroline Ellison, FTX co-founder Gary Wang, and FTX engineering director Nishad Singh, pleaded guilty to fraud charges and testified against Bankman-Fried under plea agreements with the government.
They are expected to be sentenced later in 2024.
End of trial
Thursday’s sentencing ends all criminal cases against Bankman-Fried. Prosecutors have withdrawn plans to take a separate set of charges to trial alleging Bankman-Fried committed bank fraud and bribed Chinese officials.
Bankman-Fried, however, could still appeal his conviction and sentencing.
