Sam Bankman-Fried, FTX Founder, Sentenced to 25 Years in Crypto Fraud Case

NEW YORK—The final blow in the erstwhile millionaire wunderkind’s spectacular collapse, Sam Bankman-Fried was sentenced to 25 years in jail on Thursday for stealing $8 billion from users of the now-defunct cryptocurrency exchange he established, FTX.

At a Manhattan court session, U.S. District Judge Lewis Kaplan imposed the sentence after dismissing Bankman-Fried’s argument that FTX consumers did not genuinely lose money and charging him with fabricating testimony during his trial. On November 2, a jury found 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 largest financial frauds in American history.

Kaplan added, “He knew it was wrong,” and then imposed the sentence. “He understood it was illegal. He feels awful about the poor wager he placed on the possibility of being discovered. However, he has the liberty to refuse to acknowledge anything.”

During his 20-minute statement to the judge, Bankman-Fried, dressed in a beige, short-sleeve jail T-shirt, admitted that FTX consumers had suffered and he apologized to his former FTX coworkers.

The conviction was the last straw in U.S. authorities’ campaign against misconduct in cryptocurrency markets, which had seen Bankman-Fried go from being an extremely wealthy businessman and significant political supporter to receiving the largest award to date. Bankman-Fried has promised to challenge both his sentence and conviction.

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FTX’s equity investors lost $1.7 billion, lenders to the Alameda Research hedge fund that Bankman-Fried created lost $1.3 billion, and FTX’s customers lost $8 billion, according to Kaplan’s findings.

“The defendant’s assertion that FTX customers and creditors will be paid in full is misleading, it is logically flawed, it is speculative,” Kaplan stated. “A thief who takes his loot to Las Vegas and successfully bets the stolen money is not entitled to a discount on the sentence by using his Las Vegas winnings to pay back what he stole.”

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In addition, the judge found that Bankman-Fried had lied when he claimed during his trial that he was unaware that his hedge fund had used client funds that had been obtained from FTX.

A 40–50-year sentence was what the federal prosecution had requested. Marc Mukasey, Bankman-Fried’s attorney, had contended that a sentence of less than five and a half years would be suitable.

Bankman-Fried addressed the judge, stating, “Customers have been suffering…. It was not my intention to downplay it. I apologize for not including that in my remarks during this process; I believe it was overlooked.

Bankman-Fried said to the judge, referring to his FTX colleagues, “I threw that all away, and they put a lot of themselves into it.” I’m plagued by it daily.”

Prosecution witnesses, three of his former close collaborators, testified that he had instructed them to utilize FTX customer funds to cover Alameda Research’s losses.

The judge was informed by Nicolas Roos, a prosecutor from the Manhattan U.S. Attorney’s office, “The scope of the criminality here is enormous.” It was prevalent in every facet of the company.”

Mukasey attempted to disassociate his client from infamous con artists such as Bernie Madoff throughout the hearing.

Mukasey described his client as an “awkward math nerd” who put a lot of effort into getting consumers their money back following FTX’s bankruptcy. “Sam was not a ruthless financial serial killer who set out every morning to hurt people,” this man stated.

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“Sam Bankman-Fried doesn’t make decisions with malice in his heart,” said Mukasey. “He makes decisions with math in his head.”

In his defense, Bankman-Fried acknowledged that he made errors, such as failing to establish a risk management team, but he insisted that he had no intention of robbing people of their money.

Members of the U.S. Marshals Service led him into the courtroom. There were his parents, Barbara Fried and Joseph Bankman, law professors at Stanford University.

Timeline of events leading to Sam Bankman-Fried, the creator of FTX, being found guilty ▶ 2017: The Massachusetts Institute of Technology graduate Bankman-Fried leaves Jane Street Capital as a quantitative trader and starts Alameda Research, a cryptocurrency trading company.

▶ MAY 2019: Gary Wang, a Bankman-Fried and former Google employee, discovered FTX as a new cryptocurrency token and derivatives trading platform.

▶ OCTOBER 2021: FTX raises $25 billion in venture capital, valued at $420 million. Bankman-Fried makes his debut on Forbes’ list of billionaires, with an estimated net worth of $22.5 billion. By year’s end, the magazine would estimate his wealth to be $26 billion.

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▶ FEBRUARY 2022: A significant number of cryptocurrency advertisements appear during the NFL Super Bowl broadcast, indicating the height of the rise in this asset class. In the “Don’t Miss Out” commercial for FTX, actor Larry David is shown as being skeptical of the platform, much like an early human who questions the value of the wheel.

▶ JUNE-JULY 2022: Amidst a decline in the price of Bitcoin and other digital assets, Bankman-Fried appears as the cryptocurrency industry’s “white knight”. Alameda provides a $200 million credit facility to cryptocurrency lender Voyager Digital, while FTX extends a $250 million loan to lender BlockFi.

▶ NOV. 2, 2022: According to a leaked Alameda Research balance sheet published by cryptocurrency news website CoinDesk, a large portion of the company’s $14.6 billion in assets are held in FTX’s token, known as FTT. Subsequently, the token’s market capitalization dropped by almost $400 million, and rival exchange Binance announced that it would sell its FTT holdings.

▶ NOV. 11, 2022: Following a surge of customer withdrawals, FTX files for bankruptcy protection in the United States, and Bankman-Fried steps down as the company’s CEO.

▶ December 12, 2022: Bankman-Fried, who resides in and is based in the Bahamas, is taken into custody. Later, the Manhattan U.S. Attorney’s office confirms that he is charged with fraud and conspiracy by a federal grand jury.

▶ December 21, 2022: Following her agreement to be extradited to the United States, Bankman-Fried departs the Bahamas. Prosecutors explain that Wang and Alameda CEO Caroline Ellison have entered guilty pleas and consented to work with them while he is in the air.

▶ December 22, 2022: Following his initial legal appearance in Manhattan federal court, Bankman-Fried is granted home detention at his parents’ Palo Alto, California, residence, contingent upon a $250 million bond.

▶ JAN. 3–12, 2023: U.S. District Judge Lewis Kaplan sets Bankman-trial Fried’s for October after he enters a not guilty plea. Bankman-Fried cites a wider decline in cryptocurrency markets for FTX’s bankruptcy, yet he denies stealing money in a blog post published after his detention.

▶ AUG. 11, 2023: After determining that there was reasonable cause to think Bankman-Fried had tampered with witnesses at least twice, including by disclosing Ellison’s confidential notes to a reporter for the New York Times, Kaplan revokes Bankman-Fried’s bail. In anticipation of her trial, Bankman-Fried is remanded to Brooklyn’s Metropolitan Detention Center.

▶ October 3, 2023: Federal court in Manhattan opens for trial.

▶ OCT. 28, 2023: Bankman-Fried gives a defense testimony, stating that while “many people got hurt” as a result of FTX’s collapse, he did not mislead anyone or steal billions of dollars from clients.

▶ November 2, 2023: All seven of the charges against Bankman-Fried are found to be true.

▶ March 28, 2024: A sentencing date for Bankman-convicted Fried’s fraud is scheduled.

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