Sam Bankman-Fried sentenced to 25 years in prison

NEW YORK – Crypto entrepreneur Sam Bankman-Fried was sentenced Thursday to 25 years in prison for a massive fraud that was sparked by the collapse of FTX, once one of the world’s most popular platforms for exchanging digital currency.

Bankman-Fried, 32, was convicted in November of fraud and conspiracy, a dramatic fall from a peak of success that included a Super Bowl ad and celebrity endorsements such as quarterback Tom Brady, the basketball star Stephen Curry and comedian Larry David.

U.S. District Judge Lewis A. Kaplan imposed the sentence in the same Manhattan courtroom where, four months ago, Bankman-Fried testified that her intention had been to revolutionize the emerging cryptocurrency market with her innovative and altruistic ideas, not to steal.

Kaplan said the sentence reflects “that there is a risk that this man will be in a position to do something very bad in the future. And it is not a trivial risk at all.” He added that it was “for the purpose of incapacitating him to the extent that he can appropriately do so for a significant period of time.”

Bankman-Fried, 32, was convicted in November of fraud and conspiracy, a dramatic drop from the previous year, when he and his companies appeared to be at the peak of success that resulted in a Super Bowl ad and celebrity endorsements. like the quarterback. Tom Brady and comedian Larry David.

Prosecutors said Bankman-Fried had cost clients, investors and lenders more than $10 billion by misappropriating billions of dollars to fuel his quest for influence and dominance in the new industry, and had illegally used money from FTX depositors to cover their expenses, which included the purchase of luxury items. properties in the Caribbean, alleged bribes to Chinese officials and private planes.

Kaplan agreed with prosecutors Thursday that Bankman-Fried should not receive leniency just because some investors and clients could recover some of the lost money. He called the argument “logically flawed” and “speculative.” He said customers lost about $8 billion, investors lost $1.7 billion and lenders suffered a shortfall of $1.3 billion.

Kaplan also cited three instances in which he concluded that Bankman-Fried committed perjury during her trial testimony, including when Bankman-Fried testified that she did not know until a few weeks before FTX collapsed and filed for bankruptcy that customer funds they were being diverted to a subsidiary of a hedge fund. from FTX.

When given the opportunity to speak, Bankman-Fried stood up and apologized in a rambling statement, saying: “A lot of people feel really disappointed. And they felt really disappointed. And I’m sorry for that. I’m sorry for what happened. “. “happened at every stage.”

He added that “my useful life is probably over. It’s been over for a while, since before my arrest.”

Defense attorney Marc Mukasey said his client had been misunderstood.

“Sam was not a ruthless financial serial killer who set out to hurt people every morning,” Mukasey said. “Sam Bankman-Fried doesn’t make decisions with malice in his heart. He makes decisions with math in his head.”

A jury found that Bankman-Fried illegally used money from FTX depositors to cover his lavish expenses, which authorities said included purchasing luxury properties in the Caribbean, flying on private jets, making huge charitable donations and contributions to political candidates, and paying bribes to Chinese officials. .

Prosecutors had recommended a prison sentence of 40 to 50 years.

“The defendant victimized tens of thousands of people and companies, on multiple continents, over a period of several years. He stole money from clients who entrusted it to him; lied to investors; sent false documents to lenders; pumped millions of dollars in illegal donations to our political system and bribed foreign officials.

“Each of these crimes deserves a long sentence,” prosecutors said in a court filing. Bankman-Fried’s lawyers, friends and family had asked for leniency, saying it was unlikely he would offend again. They also said FTX investors have largely recovered their funds – a claim disputed by bankruptcy attorneys, FTX and their creditors.

“Mr. Bankman-Fried continues to live a life of deception,” wrote John Ray, the FTX CEO who has been cleaning up the bankrupt company. “The ‘business’ he abandoned on November 11, 2022 was neither solvent nor secure.”

Two weeks ago, Mukasey attacked a parole office recommendation of 100 years in prison, saying a sentence of that length would be “grotesque” and “barbaric.”

He urged the judge to sentence Bankman-Fried to five to six and a half years in prison, which Mukasey said was a fair reading of federal sentencing guidelines.

“Sam is neither the ‘evil genius’ portrayed in the media nor the greedy villain portrayed at trial,” Mukasey said, calling his client a “first-time, non-violent offender.”

Bankman-Fried was worth billions of dollars in the role as co-founder and CEO of FTX, which at one time was the world’s second-largest cryptocurrency exchange.

FTX allowed investors to purchase dozens of virtual currencies, from Bitcoin to more obscure ones like Shiba Inu Coin. With billions of dollars in cash from investors, Bankman-Fried took out a Super Bowl ad to promote his business and bought the naming rights to a stadium in Miami.

But the collapse of cryptocurrency prices in 2022 took its toll on FTX and ultimately caused its downfall. FTX’s hedge fund subsidiary, known as Alameda Research, had purchased billions of dollars in various cryptocurrency investments that lost considerable amounts of value in 2022. Bankman-Fried attempted to plug the holes in Alameda’s balance sheet with funds from FTX clients.

Three other people in Bankman-Fried’s inner circle pleaded guilty to related crimes and testified at her trial.

The biggest name among the three was Caroline Ellison, Bankman-Fried’s one-time girlfriend. Ellison described Bankman-Fried as a calculating individual who knew she was likely committing crimes when she directed the use of clients’ funds. Two other former friends of Bankman-Fried, Gary Wang and Nishad Singh, also testified that they felt Bankman-Fried had directed them to commit fraud.