Bankman-Fried sentenced 25 yrs for multi-billion dollar FTX fraud

Sam Bankman-Fried was sentenced to 25 years in prison by a judge on Thursday for stealing $8 billion from customers of the now-bankrupt FTX cryptocurrency exchange he founded, the last step in the former billionaire wunderkind's dramatic downfall.

A jury found Bankman-Fried, 32, guilty on Nov. 2 on seven fraud and conspiracy counts stemming from FTX's 2022 collapse in what prosecutors have called one of the biggest financial frauds in US history.

Kaplan said Bankman-Fried had shown no remorse.

"He knew it was wrong," Kaplan said before handing down the sentence. "He knew it was criminal. He regrets that he made a very bad bet about the likelihood of getting caught. But he is not going to admit a thing, as is his right."

Bankman-Fried, wearing a beige short-sleeve jail T-shirt, acknowledged during 20 minutes of remarks to the judge during the hearing that FTX customers had suffered and he offered an apology to his former FTX colleagues - but did not admit criminal wrongdoing.

He has vowed to appeal his conviction and sentence.

Sam Bankman-Fried sentencing courtroom sketch 1
FTX cryptocurrency exchange founder Sam Bankman-Fried stands before US District Judge Lewis Kaplan as he is sentenced to 25 years in prison, at Federal Court in New York City, US, March 28, 2024, in this courtroom sketch. Image by Jane Rosenberg | Reuters.

Bankman-Fried stood with his hands clasped before him as Kaplan read the sentence. He spoke with his defense lawyer Marc Mukasey briefly before he was led out of the courtroom by members of the US Marshals Service after the hearing.

The sentence marked the culmination of Bankman-Fried's plunge from an ultra-wealthy entrepreneur and major political donor to the biggest trophy to date in a crackdown by US authorities on malfeasance in cryptocurrency markets.

"His deliberate and ongoing lies demonstrated a brazen disregard for customers' expectations and disrespect for the rule of law," Damian Williams, the US Attorney in Manhattan, said in a statement.

‘I’m sorry for that’

Kaplan found that FTX customers lost $8 billion, FTX's equity investors lost $1.7 billion, and that lenders to the Alameda Research hedge fund Bankman-Fried founded lost $1.3 billion. The judge also said Bankman-Fried lied during his testimony when he said he did not know that his hedge fund had spent customer deposits taken from FTX.

Federal prosecutors had sought a prison sentence of 40 to 50 years. Mukasey had argued that a sentence of less than 5-1/4 years would be appropriate.

Addressing the judge, Bankman-Fried said, "Customers have been suffering ... I didn't at all mean to minimize that. I also think that's something that was missing from what I've said over the course of this process, and I'm sorry for that."

Referring to his FTX colleagues, Bankman-Fried told the judge, "They put a lot of themselves into it, and I threw that all away. It haunts me every day."

Sam Bankman-Fried sentencing courtroom sketch 2
FTX founder Sam Bankman-Fried stands at the defense table to make a statement to US District Judge Lewis Kaplan at Federal Court in New York City, US, March 28, 2024, in this courtroom sketch. Image by Jane Rosenberg | Reuters.

Three of his former close associates testified as prosecution witnesses at trial that he had directed them to use FTX customer funds to plug losses at Alameda Research. All three have pleaded guilty to fraud.

During the hearing, Mukasey sought to distance his client from notorious fraudsters like Bernie Madoff.

"Sam was not a ruthless financial serial killer who set out every morning to hurt people," Mukasey said, describing his client as an "awkward math nerd" who worked hard to get customers their money back after FTX's collapse."Sam Bankman-Fried doesn't make decisions with malice in his heart," Mukasey added. "He makes decisions with math in his head."

Bankman-Fried testified in his own defense that he made mistakes such as not implementing a risk management team, but denied he intended to defraud anyone or steal customers' money.

His parents, Stanford University law professors Joseph Bankman and Barbara Fried, attended the sentencing. Bankman held a green umbrella as they exited the courthouse into a rainy Manhattan afternoon with their arms around each other.

Sam Bankman-Fried FTX Arena
Sam Bankman Fried in 2021, after FTX negotiated what was to be a 19-year, $135 million naming rights deal for the Miami-Dade arena, home for the NBA's Miami Heat basketball team. After the company's collapse, the county quickly changed the FTX arena name to the Kaseya Center. Image by Reuters.

A Massachusetts Institute of Technology graduate, Bankman-Fried rode a boom in the values of Bitcoin and other digital assets to a net worth of $26 billion, according to Forbes magazine, before he turned 30.

Bankman-Fried became known for his mop of unkempt curly hair and commitment to a movement known as effective altruism, which encourages talented young people to focus on earning money and giving it away to worthy causes. He also was one of the biggest contributors to Democratic candidates and political causes ahead of the 2022 US midterm elections.

Prosecutors have said the responsible image he cultivated concealed his years-long embezzlement of customer funds.

Bankman-Fried has been detained at the Metropolitan Detention Center in Brooklyn since August 2023, when Kaplan revoked his bail after finding he likely tampered with witnesses at least twice. Kaplan said he would recommend that Bankman-Fried be sent to a prison close to San Francisco.

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