 "Why did Sam-Bankman Fried get 25 years in prison? How much will he actually serve?")
Until a few years ago, FTX stood as a beacon of trust in the crypto world, with Sam Bankman-Fried at its helm. He was the industry’s golden boy. Launched in 2019, FTX positioned itself as a user-friendly gateway to cryptocurrency trading. The early 2020s witnessed the company’s meteoric rise, evidenced by Super Bowl ads and branding partnerships with the Miami Heat’s arena.
However, by November of the same year, FTX’s fortunes took a drastic turn as it plummeted into bankruptcy. Now, Sam Bankman-Fried has been sentenced to 25 years in prison on Thursday (28 March). The charges? Stealing around $8 billion (Rs 6,66,71 crore) from customers.
US district judge Lewis Kaplan delivered the verdict in Manhattan, dismissing Bankman-Fried’s claim that FTX customers had not suffered losses and accusing him of deception during his trial testimony.
“He knew it was wrong,” Kaplan said, blaming the sentence on Bankman-Fried’s blatant disregard for ethical and legal boundaries. “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.”
What do we know about the verdict?
Bankman-Fried, 32, was convicted in November on seven counts of fraud and conspiracy. A jury found that Bankman-Fried illegally used funds from FTX depositors for his expenses, which included the purchase of luxury properties in the Caribbean, private planes, significant contributions to US political campaigns, and paying $150 million (Rs 1,249 crore) in bribes to Chinese government officials
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More ShortsThough Bankman-Fried offered his apologies during the sentencing, Judge Kaplan didn’t buy any of them. “I know a lot of people feel really let down, and they were right, they were, were very let down. I’m sorry about that. I’m sorry about what happened at every stage, things I should have done and said, things I shouldn’t have. I failed everyone that I care about and everything I care about too,” he said during the hearing as per the New York Post.
“He did it because he wanted to be a hugely, hugely politically influential person in this country,” said Kaplan, adding that “Sam knew it was a crime, he regrets that he made a very bad bet about the likelihood of being caught,” the New York Post quotes Kaplan saying.
Aside from his 25 years in prison, the former business owner was ordered to repay $11 billion and forfeit any assets that could help him make the large payment.
The US government had sought a sentence of 40-50 years, but the US justice department stated that the sentence “sends a strong message to others who may be tempted to commit financial crimes that justice will be swift and severe”.
**Also Read: Who is Sam Bankman-Fried, the 30-year-old crypto CEO who lost his billionaire status overnight?**Three members of Bankman-Fried’s inner circle pleaded guilty to related crimes and testified in the trial, including Caroline Ellison, Bankman-Fried’s former girlfriend, according to CBC News. Ellison, who was sentenced to 11 years in prison in November, described Bankman-Fried as a calculated individual who knew he was likely breaking the law when he directed the use of customer funds.
What wrong did Bankman-Fried do?
FTX had two lines of business: a brokerage where customers could deposit, buy, and sell cryptocurrency assets on the FTX platform, and an affiliated hedge fund known as Alameda Research, which took speculative positions in cryptocurrency investments. As Alameda piled up losses during a cryptocurrency market decline, prosecutors said Bankman-Fried directed funds to be moved from FTX’s customer accounts to Alameda to plug holes in the hedge fund’s balance sheet.
Prosecutors said Bankman-Fried also created secret loopholes in the computer code for the FTX platform that allowed Alameda to incur a multibillion-dollar negative balance that the hedge fund couldn’t repay, lied to a bank about the purpose of certain accounts it opened, evaded banking regulations and bribed Chinese officials in an attempt to regain access to bank accounts that had been frozen in that country during an investigation.
What did Bankman-Fried say in his defence?
In interviews and court testimony, Bankman-Fried acknowledged making mistakes, but blamed some of the wrongdoing on other executives at his company, and said he never intended to defraud anyone. He has also said the alleged harm to FTX’s customers has been exaggerated.
In court, his lawyer, Marc Mukasey, stated that Sam Bankman-Fried is a well-intentioned “awkward math nerd” and that “it’s obviously a serious offence, but Sam was not a financial serial killer who set out to hurt people.”
His parents, Stanford law professors Joseph Bankman and Barbara Fried, said in a statement to the news agency AFP, “We are heartbroken and will continue to fight for our son.”
How much time will SBF serve?
Bankman-Fried might not serve his complete sentence. His lawyers plan to appeal the conviction and the sentence. Even if they fail, his sentence could be reduced for good behaviour.
For starters, he will be credited for the time he spent in prison before the hearing, shaving 7.5 months or so off his remaining time in incarceration.
According to Christopher Zoukis, a federal prison consultant based out of Charleston, South Carolina, will likely serve about three-quarters of the sentence. Like all federal prisoners, SBF will automatically get a 15 per cent reduction in his sentence for good conduct, reducing it by 45 months. That’s applied preemptively, usually within the first couple weeks of being in custody, Zoukis told Fast Company.
Mark Bini, a veteran prosecutor-turned-defence lawyer at white-shoe law firm Reed Smith told New York Post that Bankman-Fried could shave off a considerable amount of time — perhaps as high as 40 or 50% — with good behaviour and completing prison rehabilitation programs, said
This means he could serve as little as 12.5 years.
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With inputs from agencies_
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