FTX’s Sam Bankman-Fried Sentenced To 25 Years In Prison For $8bn Fraud

Sam Bankman-Fried. Image credit: FTX

Dramatic downfall. Sam Bankman-Fried sentenced to 25 years in prison for masterminding $8bn fraud that brought down FTX

Former crypto billionaire and FTX founder and CEO Sam Bankman-Fried has found out his fate, after a judge sentenced him to a lengthy prison sentence.

Reuters reported that on Thursday Sam Bankman-Fried was sentenced to 25 years in prison for stealing $8 billion from customers of the now-bankrupt FTX cryptocurrency exchange he founded.

It comes after Bankman-Fried had in November 2023, after a month long trial, been found guilty of all US charges (including fraud, money-laundering and stealing funds) for his role in the collapse of FTX and Alameda Research.

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Prison sentence

FTX had collapsed into Chapter 11 bankruptcy protection back in November 2022, when a multi-billion dollar hole was found in its balance sheet – amid reports of financial impropriety.

The collapse was triggered after FTX management had failed to a secure rescue bid and additional funding.

In January 2024 FTX abandoned efforts to restart its crypto exchange, instead opted to liquidate all assets and return funds to customers.

Now Reuters reported that US District Judge Lewis Kaplan has handed down a stiff prison sentence at a Manhattan court hearing, after rejecting Bankman-Fried’s claim that FTX customers did not actually lose money and finding that he lied during his trial testimony.

Judge Kaplan also said Bankman-Fried had shown no remorse.

“He knew it was wrong,” Judge Kaplan reportedly said before handing down the sentence. “He knew it was criminal. He regrets that he made a very bad bet about the likelihood of getting caught. But he is not going to admit a thing, as is his right.”

Bankman-Fried reportedly stood with his hands clasped before him as Judge Kaplan read the sentence.

He spoke with his defence lawyer Marc Mukasey briefly before he was led out of the courtroom by members of the US Marshals Service after the hearing.

Deliberate lies

“His deliberate and ongoing lies demonstrated a brazen disregard for customers’ expectations and disrespect for the rule of law,” Damian Williams, the US Attorney in Manhattan, said in a statement.

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

The judge also said Bankman-Fried lied during his testimony when he said he did not know that his hedge fund had spent customer deposits taken from FTX.

Bankman-Fried had potentially been facing a prison sentence of 100 plus years.

In February his defence lawyer Marc Mukasey had urged the judge not to impose that 100 year sentence, and instead argued that a sentence of less than 5 to 6 years would be appropriate.

Federal prosecutors had sought a prison sentence of 40 to 50 years.

Bankman-Fried comments

Before his sentencing, Bankman-Fried had addressed the court for 20 minutes and admitted to the judge during the hearing that FTX customers had suffered and he offered an apology to his former FTX colleagues – but he did not admit criminal wrongdoing.

Addressing the judge, Bankman-Fried was quoted by Reuters as saying, “Customers have been suffering … I didn’t at all mean to minimise that. I also think that’s something that was missing from what I’ve said over the course of this process, and I’m sorry for that.”

Referring to his FTX colleagues, Bankman-Fried reportedly told the judge, “They put a lot of themselves into it, and I threw that all away. It haunts me every day.”

Three of his former close associates testified as prosecution witnesses at trial that he had directed them to use FTX customer funds to plug losses at Alameda Research.

All three have pleaded guilty to fraud.

Bankman-Fried has vowed to appeal his conviction and sentence.

Not Bernie Madoff

During the hearing, defence counsel Mukasey had reportedly sought to distance his client from notorious fraudsters like Bernie Madoff.

“Sam was not a ruthless financial serial killer who set out every morning to hurt people,” Mukasey was quoted by Reuters as saying, describing his client as an “awkward math nerd” who worked hard to get customers their money back after FTX’s collapse.

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