FTX founder Sam Bankman-Fried received a 25-year prison sentence on Thursday for fraud related to the downfall of his digital exchange, marking the conclusion of a remarkable journey from crypto success to legal troubles.
Just a short while ago, Bankman-Fried, known for his distinctive hairstyle and youthful demeanor, mingled with world leaders, enjoyed luxurious Caribbean vistas from his $30 million penthouse, and pledged to use his wealth for philanthropy.
Last year, a jury convicted the 32-year-old of embezzling billions from FTX users and deceiving investors and creditors of his crypto investment firm, Alameda Research.
U.S. District Judge Lewis Kaplan, alongside issuing over $11 billion in financial penalties, reflected on Bankman-Fried’s significant harm, audacious behavior, disregard for the truth, and apparent lack of genuine remorse. Kaplan emphasized the potential danger of Bankman-Fried’s freedom, stating, “It’s not a trivial risk at all.”
Ahead of the sentencing, Bankman-Fried, appearing in tan jail attire with clasped hands, expressed remorse to the judge, acknowledging the weight of his actions.
“I was accountable for FTX, and its collapse rests on my shoulders,” the FTX founder stated during a 20-minute address.
“A lot of people were let down,” he said, adding, “I’m sorry about that.”
Federal prosecutors labeled Bankman-Fried’s actions as one of the most significant financial frauds in U.S. history. Followed by greed and arrogance, he utilized others’ funds to sustain his extravagant lifestyle, engage in risky ventures, and advance his political objectives, according to the prosecutors.
During court proceedings, prosecutors urged Judge Kaplan to impose a 40 to 50-year prison term on Bankman-Fried. Assistant U.S. Attorney Nicolas Roos emphasized the potential for future criminal behavior if Bankman-Fried were not subjected to a lengthy sentence. “If Mr. Bankman-Fried thought that mathematics would justify it, he would do it again,” Roos stated.
In contrast, Bankman-Fried’s legal team advocated for a maximum prison sentence of six years, citing his ongoing contributions to society. They highlighted his autism, profound remorse, and charitable endeavors as grounds for leniency.
Marc Mukasey, representing Bankman-Fried, emphasized to the judge that his client was not a “ruthless financial serial killer” followed by a desire to harm others.
“Sam Bankman-Fried does not make decisions with malice in his heart,” Mukasey asserted. “He makes decisions with math in his head.”
Bankman-Fried, whose parents were professors at Stanford Law School, co-founded FTX in 2019 alongside a fellow Massachusetts Institute of Technology alumnus. The company experienced rapid growth, capitalizing on the increasing popularity of crypto trading.
FTX attracted millions of users who were drawn to Bankman-Fried’s persona as a brilliant, unconventional entrepreneur, as well as to FTX’s marketing campaigns featuring NFL star Tom Brady and comedian Larry David.
As FTX’s value surged, Bankman-Fried traversed the globe on private jets and hosted lavish dinners attended by notable figures like Bill Clinton and Tony Blair. He also emerged as a prominent political donor in Washington, advocating for regulatory clarity in the cryptocurrency space.
However, this world of success came crashing down in early November 2022 when a purportedly leaked Alameda balance sheet, published by the crypto website CoinDesk, triggered a panic among FTX customers, leading to a run on their funds.
Shortly thereafter, FTX filed for bankruptcy protection, and Bankman-Fried was charged by the Manhattan U.S. attorney’s office a month later.
During a month-long trial in the autumn, jurors listened to testimony from three of Bankman-Fried’s key associates, including his former girlfriend, who claimed that the FTX founder instructed them to engage in illegal activities alongside him.
Bankman-Fried made the uncommon decision to testify in his defense. He maintained to jurors that he never engaged in fraud, although he faltered under cross-examination, repeatedly stating that he couldn’t recall specifics.
On Thursday, Judge Kaplan stated that Bankman-Fried committed perjury during his testimony, including when he asserted to jurors that he was unaware until autumn 2022 that Alameda had utilized FTX customer deposits.
In the lead-up to sentencing, supporters of Bankman-Fried penned letters to the judge, citing his battles with depression, autism, and anhedonia—the inability to experience happiness—as factors warranting a more lenient sentence.
Carmine Simpson, a former police officer, described the FTX founder as a selfless individual who remained steadfast in his convictions, even while incarcerated.
“Even though twelve out of every fourteen of Sam’s weekly meals are just undercooked rice, a scoop of disgusting-looking beans, and week-old brown lettuce, Sam has stayed true to his commitment to not participate in the maltreatment of animals,” Simpson wrote. According to court records, Simpson pleaded guilty last year to sexual exploitation of a child.
In a letter addressed to Judge Kaplan, Bankman-Fried’s mother, Barbara Fried, reflected on her son’s lifelong pursuit of making a positive impact on the world. She recounted an incident from his childhood when, at the age of 4, he attempted to assist a fallen toddler.
Fried also highlighted Bankman-Fried’s intellectual precociousness, noting that he independently got into complex moral and philosophical literature during middle school. Despite battling depression himself, she added, he offered guidance to depressed classmates during high school.
“This is not just a personal tragedy,” Fried expressed to the judge. “The ease with which we consign young lives with so much promise to the trash heap is a societal tragedy as well.”
Prosecutors asserted that Bankman-Fried’s fraudulent activities resulted in losses totaling $10 billion, placing him in the company of the nation’s most infamous white-collar criminals.
They drew parallels between him and Bernie Madoff, the Manhattan financier behind a Ponzi scheme that caused $13 billion in losses. Madoff was sentenced to 150 years in prison and passed away in prison at the age of 82 in 2021.
FTX’s current Chief Executive, John Ray, stated in a filing to the judge that customers are anticipated to be reimbursed the value of their claims as of the date the exchange sought bankruptcy protection.
However, Ray noted that since then, many cryptocurrencies have appreciated, meaning customers will miss out on potential financial gains.
Sunil Kavuri, one of the victims, informed the judge that he lost money he had been saving for a house and his children’s education. “It’s a continuous lie that we are all made whole,” Kavuri lamented, revealing that he had spoken with numerous other victims.
Attorney Adam Moskowitz, representing some FTX creditors, informed Judge Kaplan that Bankman-Fried had recently supported their efforts.
Judge Kaplan clarified on Thursday that when determining the sentence, he wasn’t considering whether customers would recover their funds. “A thief who takes his loot to Las Vegas and successfully bets the stolen money is not entitled to a discount on the sentence,” the judge asserted.
