Jai Sahu
Sam Bankman-Fried, one of the co-founders of the defunct crypto exchange FTX, received a 25-year prison sentence for defrauding customers and investors of his now-bankrupt company.
This ruling marks the final chapter in the downfall of the once-billionaire, who was a prominent figure in the crypto world before his company’s collapse in 2022.
He was found guilty of embezzling billions from customers prior to the company’s demise.
Bankman-Fried’s legal team plans to challenge his conviction.
A message from his parents, conveyed to the BBC by a representative for Bankman-Fried, expressed their sorrow and determination to support their son.
In court, the 32-year-old acknowledged that many people felt “really let down.”
“I’m sorry about that. I’m sorry about what happened at every stage,” he said, speaking calmly and clearly before his sentencing.
FTX was once among the world’s largest crypto exchanges, elevating Bankman-Fried’s status and attracting millions of customers who traded cryptocurrency on the platform.
Rumors of financial difficulties led to a rush of withdrawals in 2022, causing the company’s collapse and revealing Bankman-Fried’s misconduct.
He was convicted by a New York jury last year on charges including wire fraud and money laundering conspiracy, after a trial detailing how he misappropriated over $8 billion from customers, using it for personal purposes such as property purchases, political donations, and other investments.
Before announcing the sentence, Judge Lewis Kaplan criticized Bankman-Fried’s behavior, stating that he had lied during his trial testimony and showed no remorse for his actions.
“He knew it was wrong. He knew it was criminal,” the judge remarked.
Although Bankman-Fried expressed sorrow for customer losses, he showed “never a word of remorse for the commission of terrible crimes,” according to the judge.
While 25 years is a significant sentence, it is less than the over 100 years Bankman-Fried could have received under official guidelines.
Federal prosecutors in New York argued for at least 40 years, citing Bankman-Fried’s massive fraud and blatant disregard for the law.
Bankman-Fried’s defense team sought a lighter sentence of approximately five to 6.5 years, citing his non-violent, first-time offender status and ongoing efforts to compensate victims through bankruptcy proceedings.
His lawyer argued for hard work and restitution as part of his punishment.
Former federal prosecutor Mitchell Epner expressed surprise at the ruling, while law professor Jennifer Taub believed the sentence was fitting given the circumstances.
“It strikes the right balance between his age and the goal of deterrence,” she said.
During his sentencing, Judge Kaplan emphasized that while a potential life sentence was unnecessary, Bankman-Fried needed a punishment that would prevent future crimes.
“There’s a real risk that he could cause harm again, and that’s not something to take lightly,” the judge stated.
He also mandated that Bankman-Fried forfeit $11 billion to compensate victims, with some assets already seized by the government, such as his shares in Robinhood.
Bankman-Fried showed little reaction to the ruling.
While admitting to mismanagement errors, Bankman-Fried maintained he acted in good faith.
In his pre-sentencing remarks, he reiterated that FTX had the means to repay customers at the time of its collapse, believing the reasons for customer suffering hadn’t been adequately explained.
“They’ve been let down by many, including myself,” he said of the exchange’s customers. “It’s been painful to witness.”
Bankman-Fried expressed regret not only for disappointing customers but also for letting down former employees, including Caroline Ellison and Gary Wang, who testified against him.
“They all contributed to something remarkable, and I destroyed it,” he lamented. “It haunts me daily.”
Numerous individuals, including former FTX customers, family, and strangers, submitted letters to the court in an attempt to influence the outcome.
Louis Dorigny, an FTX customer from California, called it a “bittersweet moment for creditors,” expressing concern that the 25-year sentence doesn’t compensate victims for their cryptocurrency losses.
Samuel Hapak, CEO of crypto trading fund Wincent, deemed the ruling “fair,” signaling a need for the industry to improve.
Judge Kaplan opted against recommending a maximum-security prison for Bankman-Fried, citing concerns about his vulnerability due to autism spectrum disorder.
Bankman-Fried’s case has garnered attention from other crypto executives and firms facing legal challenges.
While not the first in the industry to be sentenced, Bankman-Fried’s case drew comparisons to Karl Sebastian Greenwood and Bernie Madoff.
Former federal prosecutor Marc Litt noted significant differences between Bankman-Fried and Madoff, suggesting the court’s decision was justified and unlikely to be overturned on appeal.