Achi news desk-
Sam Bankman-Fried was sentenced to 25 years in prison by a judge on Thursday for stealing US$8 billion from customers of the now-bankrupt FTX cryptocurrency exchange he founded, the latest step in the former billionaire wunderkind’s dramatic downfall.
US District Judge Lewis Kaplan handed down the sentence at a court hearing in Manhattan after rejecting Bankman-Fried’s claim that FTX customers did not actually lose money and accusing him of lying during his trial testimony. A jury found Bankman-Fried, 32, guilty on November 2 on seven counts of fraud and conspiracy stemming from the 2022 collapse of FTX in what prosecutors have called one of the largest financial frauds in US history.
“He knew it was wrong,” Kaplan said of Bankman-Fried before the sentencing. “He knew it was criminal. He regrets that he made a very bad bet about the probability of being caught. But he is not going to admit anything, as is his right.”
Bankman-Fried stood with his hands clasped in front of him as Kaplan read the sentence.
Bankman-Fried, wearing a beige short-sleeved prison t-shirt, acknowledged during 20 minutes of comments to the judge that FTX customers had suffered and offered an apology to his former FTX colleagues.
The sentence was the culmination of Bankman-Fried’s rise from ultra-wealthy entrepreneur and major political donor to the biggest trophy yet in a crackdown by US authorities on wrongdoing in cryptocurrency markets. Bankman-Fried has vowed to appeal against his conviction and sentence.
Kaplan said he found FTX customers lost $8 billion, FTX equity investors lost $1.7 billion, and borrowers to the Bankman-Fried-founded Alameda Research hedge fund lost $1.3 billion.
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“Defendant’s claim that FTX customers and creditors will be paid in full is misleading, logically flawed, speculative,” Kaplan said. “A thief who takes his loot to Las Vegas and successfully bets the stolen money is not entitled to a reduced sentence by using his Las Vegas winnings to pay what he stole according to.”
The judge also said Bankman-Fried lied during his trial testimony when he said he did not know his hedge fund had spent customer deposits taken from FTX.
Federal prosecutors had sought a prison sentence of 40 to 50 years. Bankman-Fried’s defense attorney, Marc Mukasey, had argued that a sentence of less than 5-1/4 years would be appropriate.
Addressing the judge, Bankman-Fried said, “Customers have been suffering… I didn’t mean to minimize that at all. I also think that was something that was missing from what I’ve said during this process, and I’m sorry for that.”
Referring to his colleagues at FTX, Bankman-Fried told the judge, “They put a lot of themselves into it, and I threw it all away. It bothers me every day.”
Three of his former close associates testified as prosecution witnesses at trial that he directed them to use FTX customers’ money to cover losses at Alameda Research.
Nicolas Roos, a prosecutor with the US Attorney’s office in Manhattan, told the judge, “The criminality here is enormous in scale. He was omnipresent in every aspect of the business.”
During the hearing, Mukasey tried to distance his client from notorious fraudsters like Bernie Madoff.
“Sam was not a ruthless financial serial killer who set out every morning to hurt people,” Mukasey said, describing his client as an “awkward math nerd” who worked hard to get customers their money back after the collapse of FTX.
“Sam Bankman-Fried does not make decisions with malice in his heart,” added Mukasey. “He makes decisions with mathematics in his head.”
Bankman-Fried testified in his own defense that he made mistakes such as not implementing a risk management team, but denied that he intended to defraud anyone or steal customers’ money.
He was led into the courtroom for the hearing by members of the United States Marshals Service. His parents, Stanford University law professors Joseph Bankman and Barbara Fried, were in attendance.
CRYPTO LIFE
A graduate of the Massachusetts Institute of Technology, Bankman-Fried boomed 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 messy curly hair and commitment to a movement called effective altruism, which encourages talented young people to focus on earning money and donating it to worthy causes. He was also one of the largest contributors to Democratic candidates and political causes ahead of the 2022 US midterm elections.
But prosecutors have said the responsible image he cultivated hid his theft of customers’ money for years.
A number of FTX customers have written to Kaplan expressing disappointment that they will be compensated based on the value of their cryptocurrencies at the time of FTX’s bankruptcy, rather than the higher levels at which those assets are currently trading of time
Bankman-Fried has been held at the Metropolitan Detention Center in Brooklyn since August 2023, when Kaplan revoked his bail after finding he was likely to tamper with witnesses at least twice.
