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FTX founder Sam Bankman-Fried sentenced to 25 years in prison
NEW YORK (AP) — Cryptocurrency entrepreneur Sam Bankman Fried was sentenced Thursday to 25 years in prison for a massive fraud involving hundreds of thousands of customers that ended in the collapse of FTX, once one of the world’s most popular digital currency trading platforms.
Although he described Bankman-Fried as “extremely intelligent,” U.S. District Judge Lewis A. Kaplan provided a scathing analysis of Bankman-Fried and his crimes before announcing a sentence that was half of what prosecutors sought and less than a quarter of the 105-year sentence. recommended by court probation officers.
“There is absolutely no question that Mr. Bankman-Fried’s name is pretty much in the mud right now around the world,” Kaplan said of the 32-year-old Californian who seemed at the top of the cryptocurrency universe before his activities collapsed in November 2022, leaving customers, investors and lenders sold more than $11 billion, which the judge ordered him to forfeit.
Was sentenced in November of fraud and conspiracy — a dramatic fall from a crest of success that included a Super Bowl ad, testimony before Congress and celebrity endorsements from stars like quarterback Tom Brady, basketball point guard Stephen Curry and comedian Larry David.
Kaplan imposed the sentence in the same Manhattan courtroom where, four months earlier, Bankman-Fried had testified that with his innovative and altruistic ideas he intended to revolutionize the emerging cryptocurrency market, not steal.
The judge said Bankman-Fried repeatedly committed perjury on the witness stand in testimony that was “often evasive, quibbling and question-dodging.”
Kaplan said the ruling reflects the risk that Bankman-Fried “will be in a position to do something very bad in the future. And it’s not a trivial risk at all.” He added that the sentence was made “with the aim of incapacitating him to the extent that this can be done appropriately for a significant period of time”.
Kaplan said he will recommend that the Federal Bureau of Prisons send Bankman-Fried to a medium-security prison near San Francisco because his notoriety, his association with vast wealth, his autism and his social awkwardness will likely make him particularly vulnerable at a high level. -security system.
Assistant U.S. Attorney Nicolas Roos had recommended it a prison sentence of 40-50 years, stating that it was the only way to ensure that “the defendant does not do it again”.
Prosecutors said tens of thousands of people and companies around the world have lost billions of dollars since 2017 after Bankman-Fried raided the accounts of FTX clients he promised were safe to make millions of dollars from political donations illegal, bribe Chinese officials, make risky investments, buy luxury properties. property in the Caribbean and live lavishly.
Kaplan agreed with prosecutors on Thursday that Bankman-Fried should not be credited because some investors and clients could recover money. He noted that customers lost about $8 billion, investors lost $1.7 billion and lenders were short $1.3 billion.
When he spoke, Bankman-Fried stood up and apologized with a rambling statement: “A lot of people feel really let down. And they were very disappointed. And I’m sorry about that. I am sorry for what happened at every stage.”
He added: “My useful life is probably over. It’s been over for a while now, since before my arrest.”
Wearing his khaki prison uniform and shackled at the ankles, Bankman-Fried appeared to become briefly emotional as he spoke for about 20 minutes, expressing regret for “many mistakes” but placing blame on others. His signature messy, thick hair had returned from the more polished look he displayed at the trial.
He praised some of his former managers and co-workers, saying: “They threw themselves and I threw everything away. It haunts me every day.
Kaplan later criticized Bankman-Fried’s remarks, saying he had “never expressed a word of remorse for committing terrible crimes.”
As his bleary-eyed client looked on, defense attorney Marc Mukasey said the portrayal of the Massachusetts Institute of Technology graduate as an “arrogant, greedy con artist who thought he could get away with stealing hard-earned money from working people hard” was wrong. .
“Sam was not a ruthless financial serial killer who set out to hurt people every morning,” Mukasey said in court after urging in court documents that any prison sentence be in the single digits. “Sam Bankman-Fried doesn’t make decisions with malice in his heart. He makes decisions with mathematics in mind.
The judge later criticized Bankman-Fried’s calculations, saying he was really “a math nerd, looking at decisions in terms of math, expected value.”
He cited trial testimony in which Bankman-Fried’s ex-girlfriend and fellow executive, Caroline Ellison, said that Bankman-Fried had once told her that his willingness to accept risk was such that he would be happy to flip a coin if it came up tails and the world was. destroyed: as long as he came out heads, the world would be twice as beautiful.
The judge said Bankman-Fried used this risk-taking nature in his companies, “betting on expected value” and weighing the risk of getting caught with the likelihood of large gains.
“That was the game,” Kaplan said. “It’s his nature.”
Bankman-Fried’s lawyers, friends and family had urged clemency, saying he was unlikely to commit the crime again. They also said that FTX investors have largely recovered their funds, a claim disputed by bankruptcy lawyers, FTX and its creditors.
“Mr. Bankman-Fried continues to live a life of illusion,” wrote John Ray, the FTX CEO who cleaned up the bankrupt company. “The ‘business’ he left on November 11, 2022 was not neither solvent nor safe.”
An FTX client, Sunil Kavuri, spoke during the sentencing, saying he had traveled from London on behalf of more than 200 victims who had submitted impact statements to the judge.
He said he had spoken to other “victims like me, whose dreams have been shattered” and that he had lived “the nightmare of FTX every day for almost two years, every day, every night, many sleepless, crying nights.”
Bankman-Fried’s parents, both Stanford Law School professors, did not speak as they left the courthouse Thursday, but later issued a statement: “We are heartbroken and will continue to fight for our son.”
Bankman-Fried, of Palo Alto, California, was once worth billions of dollars on paper as co-founder and CEO of FTX, which was once the world’s second-largest cryptocurrency exchange.
FTX allows investors to purchase dozens of virtual currencies, from Bitcoin to more obscure ones like Shiba Inu Coin. With billions of dollars in investor cash, Bankman-Fried ran a Super Bowl ad to promote his business and bought the naming rights to an arena in Miami.
But the collapse of cryptocurrency prices in 2022 took a toll on FTX, ultimately leading to its downfall. FTX’s hedge fund affiliate, Alameda Research, had purchased billions of dollars of various cryptocurrency investments that lost significant amounts of value in 2022. Bankman-Fried tried to plug holes in Alameda’s balance sheet with client funds by FTX.
Three people from Bankman-Fried’s inner circle pleaded guilty to related crimes and testified at the trial.
In addition to Ellison, two former friends of Bankman-Fried – Gary Wang and Nishad Singh – testified that they believed they were directed by Bankman-Fried to commit fraud.