The Downfall of a Crypto King Sam Bankman Fried’s
Secret back doors had been established that allowed SBF’s other company, Alameda Research, to access money belonging to FTX customers and make risky bets without their knowledge.
Disgraced crypto entrepreneur Sam Bankman-Fried has been sentenced to 25 years in prison after being convicted of stealing billions from his customers.
He was the chief executive of FTX, which suddenly went bankrupt in November 2022, leaving millions of users frozen out of their accounts and unable to make withdrawals.
The 32-year-old could have faced up to 100 years behind bars, but last month, his lawyers argued such a sentence would have been “barbaric” and a five-year term would be more appropriate.
Initial reports said he had been sentenced to 20 years, but this has since been corrected to 25.
Prosecutors had asked the judge to jail Bankman-Fried for 40 to 50 years, arguing the public needed protection from the fraudster and a harsh punishment would deter other criminals.
“The defendant victimized tens of thousands of people and companies across several continents over a period of multiple years,” prosecutors said in a court filing.
“He stole money from customers who entrusted it to him; he lied to investors; he sent fabricated documents to lenders; he pumped millions of dollars in illegal donations into our political system; and he bribed foreign officials. Each of these crimes is worthy of a lengthy sentence.”
Prosecutors also said Bankman-Fried had cost customers, investors, and lenders over $10 billion by misappropriating funds to fuel his quest for influence and dominance in the new industry and had illegally used money from FTX depositors to cover his expenses, which included purchasing luxury properties in the Caribbean, alleged bribes to Chinese officials, and private planes.
At the sentencing hearing, Judge Lewis Kaplan said the businessman lied on the witness stand when he insisted he had no knowledge of customer funds being used this way.
The judge also described Bankman-Fried’s claim that victims will be paid back in full as “misleading and logically flawed”.
“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,” Judge Kaplan warned
The judge said that the sentence reflected “a risk that this man will be in a position to do something very bad in the future. And it’s not a trivial risk at all.”
He added that it was “for the purpose of disabling him to the extent that can appropriately be done for a significant period of time.”
Before he was sentenced, Mr. Bankman-Fried apologised in a rambling statement.
The judge said that the sentence reflected “a risk that this man will be in a position to do something very bad in the future. And it’s not a trivial risk at all.”
He added that it was “for the purpose of disabling him to the extent that can appropriately be done for a significant period of time.”
Before he was sentenced, Mr. Bankman-Fried apologised in a rambling statement.
Bankman-Fried’s conviction followed a dramatic fall from grace during his time as chief executive of FTX, the second-largest cryptocurrency exchange in the world at one time, when he was worth billions of dollars on paper.
FTX allowed investors to buy dozens of virtual currencies, from Bitcoin to more obscure ones like Shiba Inu Coin.
Flush with billions of dollars of investors’ cash, Bankman-Fried rode a crest of success that included a Super Bowl advertisement and celebrity endorsements from stars like quarterback Tom Brady, basketball star Stephen Curry, and comedian Larry David.
But after the collapse of cryptocurrency prices in 2022, Bankman-Fried tried to plug the holes in the balance sheet of FTX’s hedge fund affiliate, known as Alameda Research.
Bankman-Fried’s victims—an estimated 80,000 of whom are based in the UK—remain out of pocket, with some losing their life savings.
Prosecutors described his crimes as one of the biggest financial frauds in US history.