FTX founder Sam Bankman-Fried sentenced to 25 years in prison for crypto fraud

FTX founder Sam Bankman-Fried was sentenced to 25 years in prison Thursday for the massive fraud and conspiracy that doomed his cryptocurrency exchange and related hedge fund, Alameda Research.

The Manhattan verdict federal court it was significantly less than the 40 to 50 years in prison that federal prosecutors had sought for Bankman-Fried, but it was far more than the five to six and a half years his attorneys had proposed.

“There is a risk that this person will be able to do something very bad in the future,” Judge Louis Kaplan said before sentencing the 32-year-old and ordering him to pay $11 billion in forfeiture to the US government.

“And it’s not a trivial risk at all,” Kaplan added.

Kaplan noted that he never heard “one word of remorse for committing terrible crimes” from Bankman-Fried.

The judge said that in 30 years on the federal bench, he had “never seen a performance” like Bankman-Fried’s trial testimony.

If Bankman-Fried did not “outright lie” during cross-examination by prosecutors, he was “evasive,” Kaplan said.

“There is absolutely no doubt that Mr Bankman-Fried’s name is in quite a bit of mud around the world at the moment,” the judge said.

Jurors during the trial also did not believe Bankman-Fried’s version of events, convicting him in November of seven criminal charges and holding him responsible for the loss of about $10 billion of clients’ money due to the securities fraud conspiracy.

Prosecutors said Bankman-Fried led a conspiracy to rob clients of money to make investments, fund political donations to both Democrats and Republicans and for his own personal use, as well as to pay off loans taken out by Alameda Research.

Before he was sentenced, Bankman-Fried spoke remorsefully, although he suggested the billions of dollars lost by customers were the result of a “liquidity crisis” or “mismanagement” rather than fraud.

“A lot of people feel really disappointed. And they were very disappointed,” he said. “And I’m sorry for that. I’m sorry for what happened at every stage.”

“My useful life is probably over,” he said, dressed in a beige prison jumpsuit. “It’s been over for a while since before my arrest.”

“They created something really beautiful and I threw it all away,” he said of his colleagues at FTX, a company once valued at $32 billion. “He haunts me every day.”

“It was excruciating to watch this all unfold,” he told Kaplan. “Customers do not deserve this level of pain.”

“I was the CEO of FTX and I was in charge.”

But despite accepting some responsibility, Bankman-Fried assumed that customers would eventually get back the money they put into his exchange, and blamed the federal bankruptcy court for not yet making those customers whole.

Kaplan seems to have stopped paying much attention at this point.

In response, Bankman-Fried crossed her arms and began rapidly tapping her right foot as she continued to speak.

Assistant U.S. Attorney Nicholas Roos, who pleaded for a sentence of up to five decades in prison, scoffed at the picture painted by Bankman-Fried and his lawyers.

FTX’s collapse at the end of 2022 was not due to a “liquidity crisis or an act of mismanagement,” Roos said. “This was a theft” of billions of dollars of customers’ money around the world, the prosecutor said. “It was a loss that affected people significantly.

Bankman-Fried’s attorney Mark Mukasey, in asking Kaplan for leniency, focused on his client’s psychological problems, noting that his mother said Bankman-Fried had a “terrible sadness at the core” that was a “constant presence in his life”.

Mukasey noted that Bankman-Fried once wrote in her diary that she had “no pleasure or happiness.”

“Sam was not a ruthless financial serial killer who went out every morning to hurt people,” the lawyer said.

Instead, “He’s an awkward math geek” with a “tireless work ethic,” said the lawyer, who also compared the FTX founder to a “beautiful puzzle.”

Bankman-Fried should not be in a “four-by-four iron box,” Mukasey argued.

Before sentencing Bankman-Fried, Kaplan said he rejected the defendant’s “entire argument that there was no loss” in FTX, calling that contention “misleading, logically flawed and speculative.”

Sunil Kavuri, a victim of Bankman-Fried, then spoke about the damage he caused.

Bankman-Fried looked at Cavouri as he described a conversation with thousands of other victims of FTX scams, some of whom suffer from depression and take prescription drugs to deal with the trauma of their losses.

“I have suffered every day for the last two years,” Kavuri said. “I continue to suffer.”

Manhattan US Attorney Damien Williams said in a statement after the sentencing: “Samuel Bankman-Fried orchestrated one of the largest financial frauds in history.”

“His willful and continued lies demonstrated a blatant disregard for his clients’ expectations and a disregard for the rule of law, all so he could covertly use his clients’ money to expand his own power and influence,” Williams said.

Attorney General Merrick Garland said: “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. “

The Bankman-Fried family said in a statement, “We are heartbroken and will continue to fight for our son.” Joseph Bankman and Barbara Fried, who are both Stanford law professors, sat in the front row of the courtroom gallery at time of sentencing.

Bankman-Fried plans to appeal her conviction and sentence.

Three other people, who all testified against Bankman-Fried in the trial, are awaiting their own sentences after pleading guilty to criminal charges related to FTX and Alameda Research.

They are Caroline Ellison, the CEO of Alameda Research, who once dated Bankman-Fried; FTX Chief Engineer Nishad Singh; and Gary Wang, co-founder and chief technology officer of FTX.