Fallen crypto tycoon Sam Bankman-Fried has been sentenced to 25 years in prison
Fallen crypto tycoon Sam Bankman-Fried has been 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 came to light with the collapse of FTX, once one of the world’s most popular digital currency exchange platforms.

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

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

Kaplan said the sentence reflects “that there is a risk that this person will be able to do something very bad in the future. And this is not a trivial risk at all. He added that this was “in order to disable it to the extent that can be done appropriately over a significant period of time”.

Bankman-Fried, 32, was convicted in November of fraud and conspiracy — a dramatic drop from a year earlier, when he and his companies appeared on the cusp of success that led to a Super Bowl ad and celebrity endorsements from stars like quarterback Tom Brady and comedian Larry David.

Prosecutors said Bankman-Fried defrauded customers, investors and creditors of more than $10 billion, embezzled billions of dollars to fuel his quest for influence and dominance in the fledgling industry, and illegally used money from depositors in FTX to to cover his expenses, which included the purchase of luxury properties in the Caribbean, alleged bribes to Chinese officials and private jets.

Kaplan agreed with prosecutors Thursday that Bankman-Fried should not get leniency just because some investors and customers might get back some of their lost money. He called the argument “logically flawed” and “speculative.” He said customers lost about $8 billion, investors lost $1.7 billion and creditors lost $1.3 billion.

Kaplan also cited three instances in which he concluded that Bankman-Fried perjured himself during his trial testimony, including when Bankman-Fried testified that he did not know until weeks before FTX went bankrupt that client funds had been diverted to a hedge fund affiliate of FTX.

Given a chance to speak, Bankman-Fried stood up and apologized in a distracted statement, saying: “A lot of people feel really disappointed. And they were very disappointed. And I’m sorry about that. I am sorry for what 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 Mark Mukasey said his client had been misunderstood.

“Sam was not a ruthless financial serial killer who went out every morning to hurt people,” Mukasey said. “Sam Bankman-Fried does not 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 spending, which authorities say included buying luxury properties in the Caribbean, flying on private jets, making extraordinary charitable donations and contributions to political candidates, and payment of bribes to Chinese officials.

Prosecutors proposed a sentence of 40 to 50 years in prison.

“The defendant victimized tens of thousands of people and companies on several continents over a period of several years. He stole money from clients who entrusted it to him; he lied to investors; sent fabricated documents to creditors; he pumped millions of dollars in illegal donations into our political system; and he bribed foreign officials. Each of these crimes deserves a long sentence,” prosecutors said in a court filing.

Bankman-Fried’s lawyers, friends and family appealed for leniency, saying he was unlikely to reoffend. They also said FTX’s investors had largely recouped their funds, a claim contested by bankruptcy attorneys, FTX and its creditors.

“Mr. Bankman-Fried continues to live a life of delusion,” wrote John Ray, CEO of FTX, which is cleaning up the bankrupt company. “The ‘business’ he left on November 11, 2022, was neither solvent nor , nor safe.’

Two weeks ago, Mukasey attacked the probation service’s 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 6 1/2 years in prison, which Mukasey said was a fair reading of federal sentencing guidelines.

“Sam is not the ‘evil genius’ portrayed in the media or the greedy villain portrayed at trial,” Mukasey said, calling his client a “first-time, non-violent offender.”

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

FTX allowed investors to buy dozens of virtual currencies, from Bitcoin to more obscure ones like Shiba Inu Coin. Flush with billions of dollars in investor money, Bankman-Fried ran a Super Bowl commercial to promote his business and bought the naming rights to an arena in Miami.

But the cryptocurrency price crash of 2022 took its toll on FTX and ultimately led to its downfall. FTX’s hedge fund affiliate, known as Alameda Research, had bought billions of dollars worth of various crypto investments that lost significant amounts of value in 2022. Bankman-Fried attempted to plug the holes in Alameda’s balance sheet with FTX client funds.

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

The biggest name among the three was Caroline Ellison, a one-time friend of Bankman-Fried. Ellison described Bankman-Fried as a calculating person who knew he was likely to commit crimes when directing the use of client funds. Two other former friends of Bankman-Fried, Gary Wang and Nishad Singh, also testified that they believed they were directed by Bankman-Fried to commit fraud.

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