FTX Founder Sam Bankman-Fried Gets to 25 Years for $8 Billion Fraud

On Thursday, a U.S. district judge sentenced Sam Bankman-Fried to 25 years in jail for stealing $8 billion from users of the now-bankrupt FTX crypto exchange he established, marking the final stage in the erstwhile billionaire wunderkind’s stunning downfall.

U.S. District Judge Lewis Kaplan imposed the sentence during a Manhattan court session after rejecting Bankman-Fried’s claim that FTX customers did not lose money and determining that he lied throughout his trial evidence. On November 2, a jury found Bankman-Fried, 32, guilty of seven fraud and conspiracy offenses arising from FTX’s 2022 collapse, which prosecutors described as one of the largest financial frauds in US history.

Sam Bankman-Fried has exhibited no remorse

“He knew it was wrong,” Kaplan explained. “He understood it was a crime. He regrets making a very lousy gamble on the likelihood of being caught. But he’s not going to admit anything, which is his prerogative.”

Bankman-Fried, dressed in a beige short-sleeve jail T-shirt, agreed that FTX consumers had suffered during his 20-minute testimony before the judge, and he apologized to his former FTX colleagues – but he denied criminal activity.

He intends to appeal his conviction and punishment.

Bankman-Fried stood with his hands clasped before Kaplan, who read the punishment. He then chatted briefly with his defense attorney, Marc Mukasey, before being escorted out of the courthouse by personnel of the United States Marshals Service.

The sentence represented the climax of Sam Bankman-Fried’s journey from ultra-wealthy entrepreneur and prominent Democrat political donor to the largest trophy to date in a crackdown by US authorities on cryptocurrency market misbehavior.

“There are serious consequences for defrauding customers and investors,” US Attorney General Merrick Garland said in a statement. “Anyone who believes they can hide their financial crimes behind wealth and power, or behind a shiny new thing they claim no one else is smart enough to understand, should think twice.”

According to Kaplan, FTX customers lost $8 billion, FTX equity investors lost $1.7 billion, and lenders to the Alameda Research hedge fund that Bankman-Fried created lost $1.3 billion. He issued a $11 billion forfeiture order and directed the government to reimburse victims using confiscated assets.

Spent FTX customers money

Federal prosecutors wanted a sentence of 40 to 50 years. Mukasey had advocated for a sentence of less than 5 and 1/4 years.
I’m sorry for that. Bankman-Fried told the judge, “Customers have been suffering…” I did not mean to belittle that. I also believe that something was lacking from what I said during this process, and I apologize for that.

Bankman-Fried referred to his FTX coworkers, saying, “They put a lot of themselves into it, and I threw it all away. “It haunts me every day.”

Three former close associates testified as prosecution witnesses that Bankman-Fried told them to utilize FTX customer monies to cover losses at Alameda Research. All three have pleaded guilty to fraud.

According to Kaplan, Bankman-Fried lied when he claimed he had no knowledge that Alameda Research had spent customer money received from FTX.

Mukasey attempted to distinguish Bankman-Fried from notable fraudsters such as Bernie Madoff, claiming that he was “not a ruthless financial serial killer” but rather a “awkward math nerd” who attempted to recover customers’ funds following FTX’s bankruptcy.

“Sam Bankman-Fried doesn’t make decisions with malice in his heart,” Mukasey said in a statement. “He makes decisions with math in his head.”

Bankman-Fried’s eyes went crimson, and he appeared to be holding back tears as Mukasey talked.

His parents, Stanford University law professors Joseph Bankman and Barbara Fried, attended the sentencing. Bankman clutched a green umbrella as they emerged from the courthouse into a rainy New York afternoon, their arms around one other.

“We are heartbroken and will continue to fight for our son,” they wrote in a statement.

Sam Bankman-Fried a crypto star

Sam Bankman-Fried, a Massachusetts Institute of Technology graduate, rode the rise in the value of bitcoin and other digital assets to a net worth of $26 billion, according to Forbes magazine, before turning 30.

Sam Bankman-Fried became well-known for his unruly curly hair and dedication to a movement known as effective altruism, which encourages outstanding young people to make money and donate it to beneficial causes.

He was a major contributor to Democratic candidates and causes prior to the 2022 US midterm elections. Kaplan cited trial evidence that Bankman-Fried donated to Republicans using “straw” contributors to conceal his involvement.

The court described Bankman-Fried’s attempts to portray himself as a “good guy” as an act, adding, “The goal was power and influence.”

Bankman-Fried has been jailed at the Metropolitan Detention Center in Brooklyn since August 2023, when Kaplan revoked his bail after determining that he likely tampered with witnesses at least twice. Kaplan stated that he would suggest sending Bankman-Fried to a prison near San Francisco.

Source: Reuters