FTX crypto mastermind Sam Bankman-Fried sentenced to 25 years in prison
A judge delivered his decision after a jury had found SBF guilty of fraud and money laundering. Prosecutors had sought 40 to 50 years for running the company ‘like he was playing Monopoly’
In the end Sam Bankman-Fried got neither the more than 100 years that he could have been sentenced to for all his crimes nor the six and a half that his lawyers were asking for at most. The founder and former CEO of the cryptocurrency exchange FTX was sentenced on Thursday in New York to 25 years in prison for his role in the company’s collapse and the $8 billion in stolen customer funds — charges which he was convicted of in November.
The prosecution and the current CEO of FTX John Ray — who has been scathing of his predecessor — argued that Bankman-Fried’s life of luxury and delusions led him to run the company like he was playing Monopoly, an expression used to describe the entrepreneur’s chaotic management style.
Bankman-Fried — better known by his initials, SBF — cheated everyone: he lied to investors who got into FTX, to lenders who pumped money into it, and to customers who traded on its exchange platform. He also financed political campaigns of both the Democratic and Republican parties, tried to bribe Chinese government officials to access $1 billion from his hedge fund frozen by Beijing, and invested in other companies and luxury real estate purchases, such as the Bahamas villa where he and his small group of friends traded cryptocurrencies.
“He is extremely smart. And he suffers from autism,” said federal judge Lewis Kaplan, noting his understanding of the condition. Kaplan said that Bankman-Fried “is capable of huge accomplishments” while noting he has “a way of interacting with people that’s unusual and sometimes off-putting.” Kaplan agreed with prosecutors’ claim that Bankman-Fried “wanted to be a hugely, hugely politically influential person in this country,” and that this propelled his financial crimes.
“A lot of people feel really let down, and they were very let down, and I am sorry about that,” Bankman-Fried said in court Thursday. “I am sorry about what happened at every stage. And there are things I should’ve done and things I shouldn’t have.” It was his first admission of responsibility and guilt since his arrest in 2022. He said that he and his business partners had created something beautiful together. “And I threw it all away. It haunts me every day.”
Seeming to sense his impending prison sentence, he said, “My useful life is probably over. It’s been over for a while now.” His attorney, Marc Mukasey, had tried to win Judge Kaplan’s sympathies by asserting that “Sam was not a ruthless financial serial killer who set out every morning to hurt people. His real motivations were misapprehended and misunderstood. Really he’s an awkward math nerd... He loves video games and veganism, and he’s compassionate to animals.”
Two weeks ago, prosecutors asked that Bankman-Fried be sentenced to between 40 and 50 years in prison, arguing that the former executive — far from showing any sign of remorse — continued to insist that his activity at the helm of FTX was in no way criminal, admitting at most to some management failures.
“His life in recent years has been one of unmatched greed and hubris; of ambition and rationalization; and courting risk and gambling repeatedly with other people’s money,” prosecutors said in a sentencing memorandum filed by federal prosecutors on March 15.
A presentence investigation report, compiled by a probation officer, recommended a 100-year sentence, just 10 years short of the maximum.
Bankman-Fried was convicted last November on seven criminal counts of fraud and money laundering, nearly a year after his extradition from the Bahamas to New York to stand trial. Previously celebrated as a cryptocurrency guru, Bankman-Fried’s company — FTX and the hedge fund Alameda Research, in reality two communicating vessels of plunder — collapsed in November 2022, less than a year after the young executive reached the top of his game.
Evidence of his success included a Super Bowl ad, celebrity endorsements and an congressional appearance. But his fall from grace was just as fast as his meteoric rise. Last August, a federal judge revoked his home detention over alleged witness tampering, including his contact with his ex-girlfriend, Caroline Ellison, who was the former head of Alameda Research. Bankman-Fried was sent to a crowded Manhattan prison, far from the comforts of his parents’ mansion, where he had spent the first few months of his conditional release after posting $250 million in bail. His three closest associates, including his ex-partner, who chose to cooperate with the U.S. justice system, testified at the trial.
The collapse of FTX and the subsequent arrest and conviction of Bankman-Fried were seen as a warning sign in the insufficiently regulated crypto sector. Although as Damian Williams, U.S. Attorney for the Southern District of New York, pointed out after the verdict: “The crypto industry might be new but this kind of fraud, this kind of corruption, is as old as time.”
The sentence against Bankman-Fried has enshrined FTX as a paradigm of corruption. Meanwhile, cryptocurrencies continue to rise on the tails of the Bitcoin rebound. The Bankman-Fried trial put the spotlight on the emerging and under-regulated cryptocurrency industry and the group of young entrepreneurs in their twenties who lived together in a luxurious mansion in the Bahamas, while dreaming of becoming the leading players in a new niche of finance.
At that time, SBF had a growing public and even political presence — he tried to gain influence in Washington by financing candidates from both parties and flirted with the idea of a possible run for the presidency. But his fortune changed and hit a definite low point when he was put on trial. Caroline Ellison, his ex-girlfriend and the prosecution’s star witness, testified that Alameda took several billion dollars of FTX clients’ money and used it for its own investments and to pay off its debt.
The money was also used to pay for the excesses of a life of luxury. According to Michael Lewis’ biography of Bankman-Fried, Going Infinite, published on the occasion of the trial, the entrepreneur was unable to name three of his lieutenants at the firm, since he hired them only to be available to sign documents any time of the day (or night).
Bankman-Fried continues to fall into even deeper disrepute, judging by the harsh criticisms of John Ray, who was appointed CEO of FTX after its collapse. In papers filed last week for bankruptcy, the CEO claimed that Bankman-Fried had misrepresented the company’s recent statements about its ability to repay customers in the event of bankruptcy, going so far as to assert that the harm to FTX’s customers, lenders and investors was “zero.”
“All of these statements are both reckless and false,” Ray wrote. He added: “The best conceivable outcome in the Chapter 11 proceedings will not yield a true, full economic recovery by all creditors and non-insider equity investors as if the fraud never happened.”
According to Ray, Bankman-Fried made those “reckless and false” statements to defend his call for a lighter prison sentence. Ray also wrote a letter to Judge Kaplan, claiming that Bankman-Fried’s claim that customers, lenders and investors were not harmed by his unhinged management was radically false and that the convicted man was living a “life of delusion.” “The ‘business’ he left on November 11, 2022 [when FTX collapsed] was neither solvent nor safe. Vast sums of money were stolen by Mr. Bankman-Fried, and he was rightly convicted by a jury of his peers,” Ray wrote.
According to Ray, the fact that the bankruptcy code dictates that each of the victims’ claims must be valued retrospectively, backdated to November 11, 2022, when the value of cryptocurrencies was 400% lower than it is today, further compounds Bankman-Fried’s false statements — or delusion.
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