Sam Bankman-Fried sentenced to 25 years for multi-billion dollar FTX fraud

On Thursday, a judge sentenced Sam Bankman-Fried to 25 years in jail for stealing $8 billion from users of the now-bankrupt FTX cryptocurrency exchange he established, marking the last stage in the erstwhile millionaire wunderkind’s stunning collapse.

At a court session in Manhattan, US District Judge Lewis Kaplan imposed the sentence, dismissing Bankman-Fried’s argument that FTX consumers did not genuinely lose money and concluding that he had lied throughout his trial evidence. On November 2, a jury convicted 32-year-old Bankman-Fried guilty of seven charges of fraud and conspiracy related to the collapse of FTX in 2022, which the prosecution described as one of the worst financial scams in US history.

According to Kaplan, Bankman-Fried has demonstrated no remorse.

“He knew it was wrong,” Kaplan said. “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.”

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Bankman-Fried apologised to his former FTX colleagues and admitted that FTX consumers had suffered during his 20-minute statement to the judge. He was wearing a beige, short-sleeve prison T-shirt, but he did not confess to any illegal activity.

He has promised to challenge his verdict and imprisonment.

As Kaplan read the sentence, Bankman-Fried stood with his hands clasped in front of him. After a brief conversation with his defence attorney Marc Mukasey, he was escorted out of the courthouse by US Marshals Service agents.

The punishment was the last in a string of events that culminated in Bankman-Fried’s downfall from an extremely rich businessman and significant political donor to the largest victim of US authorities’ crackdown on misbehaviour in cryptocurrency markets.

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“There are serious consequences for defrauding customers and investors,” US Attorney General Merrick Garland said in a statement. “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.”

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. He imposed an $11 billion forfeiture order and authorized the government to repay victims with seized assets.

Federal prosecutors had sought a sentence of 40 to 50 years. Mukasey had argued for a sentence of less than 5-1/4 years.

‘I’m sorry for that’

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 added, “They put a lot of themselves into it, and I threw that all away. It haunts me every day.”

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

Kaplan said Bankman-Fried lied when testified that he did not know Alameda Research had spent customer deposits taken from FTX.

Mukasey sought to distance Bankman-Fried from notorious fraudsters like Bernie Madoff, saying he was “not a ruthless financial serial killer” but rather an “awkward math nerd” who tried 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’s eyes turned red as he appeared to hold back tears while Mukasey spoke.

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 New York afternoon, their arms around each other.

“We are heartbroken and will continue to fight for our son,” they said in a statement.

‘Power and influence’

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 called effective altruism, which encourages talented young people to focus on earning money and giving it away to worthy causes.

He was one of the biggest contributors to Democratic candidates and causes before the 2022 US midterm elections. Kaplan pointed to trial evidence showing Bankman-Fried also donated to Republicans through “straw” donors to hide his involvement.

The judge called Bankman-Fried’s efforts to present himself as a “good guy” an act, adding, “The goal was power and influence.”

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 Bankman-Fried be sent to a prison close to San Francisco.