NEW YORK (AP) — Entrepreneur in the cryptocurrency space Sam Bankman-Fried was sentenced to 25 years in jail on Thursday for a colossal fraud that affected hundreds of thousands of clients and came to an end with the demise of FTX, which was once among the most well-known platforms for trading digital currencies worldwide.
After a scathing indictment of Bankman-Fried and his offenses, U.S. District Judge Lewis A. Kaplan announced a sentence that was less than 25% of the 105 years the court’s probation officers had suggested and half of what the prosecution had requested.
Regarding the 32-year-old who once appeared to be at the top of the cryptocurrency world before his businesses failed in November 2022, leaving clients, investors, and lenders short of over $11 billion, which the judge ordered him to forfeit, Kaplan stated, “There is absolutely no doubt that Mr. Bankman-Fried’s name right now is pretty much mud around the world.”
Following a meteoric rise to fame that featured a Super Bowl commercial and celebrity endorsements from athletes including quarterback Tom Brady, basketball player Stephen Curry, and comedian Larry David, he was found guilty in November of fraud and conspiracy.
In the Manhattan courtroom where Bankman-Fried had testified four months earlier, claiming that he had not intended to steal but rather to use his creative and charitable ideas to transform the nascent bitcoin market, Kaplan handed down the punishment. According to the judge, Bankman-Fried frequently lied on the witness stand, committing perjury.
“There is a risk that this man will be in position to do something very bad in the future,” according to Kaplan, who claimed the sentence reflected. And the risk is by no means insignificant. “The goal is to disable him to the extent that can be done appropriately for a significant period of time,” he continued.
Because of Bankman-Fried’s celebrity, association with huge money, autism, and social awkwardness, Kaplan said he would suggest the Federal Bureau of Prisons to put him to a medium-security jail close to San Francisco. This is because he would likely be particularly susceptible at a high-security facility.
The only way to guarantee that “the defendant doesn’t do it again,” according to Assistant U.S. Attorney Nicolas Roos, was to sentence the defendant to 40 to 50 years in prison.
Over a number of years, the defendant harmed tens of thousands of individuals and businesses on numerous continents. He deceived to investors, pushed millions of dollars in illicit donations into our political system, paid foreign authorities, and stole money from clients who trusted him with their money. Prosecutors had stated in a court document that “a lengthy sentence is worthy of each of these crimes.”
The prosecution claimed that Bankman-Fried had illegally used money from FTX depositors to pay for his expenses, which included buying opulent properties in the Caribbean, paying bribes to Chinese officials, and leasing private aircraft. Bankman-Fried was accused of misappropriating billions of dollars to further his ambition for power and dominance in the new industry.
Prosecutors and Kaplan said on Thursday that Bankman-Fried should not be granted leniency merely because certain investors and customers may receive a portion of their losses back. He reported that lenders were shorted by $1.3 billion, investors lost $1.7 billion, and consumers lost roughly $8 billion.
When given the opportunity to address the group, Bankman-Fried stood and apologized, stating incoherently that “a lot of people feel really let down.” They were quite disappointed. I apologize for that as well. I apologize for anything that transpired at every turn.
“My useful life is probably over,” he continued. It ended before my arrest, so it has been a while.
Wearing a khaki-colored prison uniform and chained at the ankles, Bankman-Fried appeared to momentarily become emotional during his about 20-minute speech. He expressed regret for making “a lot of mistakes,” but he also placed part of the blame on others. His signature disheveled and unkempt hair had returned from his trial appearance with the trimmer cut.
After hearing those comments, the court chastised the speaker, saying he showed “never a word of remorse for the commission of terrible crimes.”
Marc Mukasey, a defense attorney, said that his client was misinterpreted.
According to Mukasey, “Sam was not a vicious financial serial killer who set out every morning to hurt people.” “Sam Bankman-Fried doesn’t make ill-intentioned decisions. He uses numbers to guide his decisions.
Friends, family, and attorneys for Bankman-Fried had pleaded for leniency, claiming that the man was unlikely to commit another crime. Additionally, they stated that most of FTX’s investors had gotten their money back, a claim that is refuted by FTX, its creditors, and bankruptcy attorneys.
“Mr. Bankman-Fried persists in leading an illusionistic life,” penned John Ray, the CEO of FTX, who has been managing the company’s bankruptcy. “He left the ‘business’ on November 11, 2022, because it was neither safe nor solvent.”
A suggestion from the probation office for 105 years in jail was attacked by Mukasey two weeks earlier, claiming that such a sentence would be “grotesque” and “barbaric.”
He asked the judge to give Bankman-Fried a sentence of five to six and a half years in jail, arguing that this was a reasonable interpretation of the federal sentencing standards.
As the CEO and co-founder of FTX, the second-biggest cryptocurrency exchange in the world at one point, Bankman-Fried had a virtually limitless net worth.
A plethora of virtual currencies, ranging from Bitcoin to less well-known ones like Shiba Inu Coin, were available for purchase on FTX. Rich from the billions of dollars invested by investors, Bankman-Fried purchased the naming rights to a Miami arena and ran a Super Bowl commercial to publicize his company.
However, FTX suffered a great deal as a result of the 2022 cryptocurrency price drop, which ultimately brought about its demise. Alameda Research, the hedge fund unit of FTX, had made billion-dollar purchases of different cryptocurrency bets that saw significant value losses in 2022. Using monies from FTX customers, Bankman-Fried attempted to close the gaps in Alameda’s balance sheet.
Three additional members of Bankman-Fried’s close circle entered guilty pleas to similar offenses and provided testimony throughout his trial.
The most well-known of the three was Caroline Ellison, who had dated Bankman-Fried. According to Ellison, Bankman-Fried was a cunning man who was aware that, when he oversaw the use of client monies, he was probably breaking the law. Gary Wang and Nishad Singh, two additional former pals of Bankman-Fried, also stated in court that they believed Bankman-Fried had given them instructions to commit fraud.