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Disgraced ‘crypto king’ Sam Bankman-Fried is sentenced to 25 years over FTX fraud scheme

The former head of FTX was sentenced over convictions of fraud and conspiracy

Ariana Baio,Katie Hawkinson
Thursday 28 March 2024 20:23 GMT
FTX: Sam Bankman-Fried arrives back in US after extradition from Bahamas

A federal judge has sentenced Sam Bankman-Fried, the founder of the bankrupt cryptocurrency exchange FTX who was found guilty of lying to investors and customers, to 25 years in prison.

Just four months after a jury found Bankman-Fried, 32, guilty of two counts of fraud and five counts of conspiracy, he faces an order to forfeit $11.2bn.

District Judge Lewis Kaplan, who presided over the sentencing Thursday morning, hit out at Bankman-Fried for putting on a “performance” to make himself seem more likeable.

“When not lying, he was evasive, hair-splitting, trying to get the prosecutors to rephrase questions for him,” Judge Kaplan said. “I’ve been doing this job for close to 30 years. I’ve never seen a performance like that.”

Bankman-Fried, once known as the “King of Crypto”, was a billionaire who appeared on the covers of magazines and brokered lucrative deals with celebrities to promote his company just two years ago.

On Thursday he sat beside his attorneys in a federal courthouse in downtown Manhattan, anxiously hearing his sentencing. He appeared in a beige jumpsuit – a fall from his typical suits.

The whole time Bankman-Fried showed little to no emotion, even while giving a personal statement to Judge Kaplan. The only time the crypto bro showed concern was after Judge Kaplan read the sentence. Bankman-Fried put his hand to his face.

In this courtroom sketch, Sam Bankman-Fried, second from right, stands while making a statement during his sentencing in Manhattan federal court (AP)

The hearing marked the end of an extensive investigation and media-frenzied trial in the case of the dramatic fall of FTX and Bankman-Fried.

The lengthy hearing included victim testimony and somewhat of an apology from Bankman-Fried.

“At the end of the day, I failed everyone that I care about and everything that I care about, too,” the 32-year-old said, just minutes before he was sentenced.

“My useful life is probably over,” he continued. “It’s been over for a while now.”

Barbara Fried and Allan Joseph Bankman, parents of Sam Bankman-Fried, attended his Thursday sentencing (Getty Images)

Bankman-Fried had acquired mass wealth through his crypto exchange FTX, which at its height was worth $32bn and had a million users. The famously tousled-haired youngster was somewhat of an anomaly in the world of crypto, both for his age and his intention to use his wealth for altruistic purposes.

But that all came crashing down in November 2022 when a CoinDesk report revealed that most of FTX’s assets were held by a quantitative trading company that Bankman-Fried also ran called Alameda Research.

The revelation sent investors and customers scrambling to withdraw their funds, which later exposed an $8bn hole in the company. As quickly as FTX grew, it fell – becoming essentially bankrupt overnight.

At the sentencing, Judge Kaplan scolded Bankman-Fried for having little to no remorse for the victims and failing to take full responsibility for the fall of FTX.

Last year, federal prosecutors used a trove of evidence and former executives from FTX to show a jury that the fall of FTX was no accident. It was the result of Bankman-Fried’s mismanagement and plan to lie to investors, lenders and customers, and use their money to grow his wealth and the company’s.

“On November 15 or 16, [Bankman-Fried] was interviewed by a reporter he knew well who said, ‘You said a lot of stuff about good regulations – was that just PR too?’ He said: ‘Yeah, f*** regulators,’” Judge Kaplan said.

“One of his pithier expressions I think, was ‘I f***** up,’” the judge continued. “Mr Bankman-Fried has the right to plead not guilty and go to trial. Everybody’s got that right and I don’t hold it against him. But I come back to [Caroline Ellison’s] testimony. He knew it was wrong.”

Caroline Ellison was a star witness in Bankman-Fried’s trial. Ms Ellison is the former co-CEO of Alameda Research, a cryptocurrency trading firm that Bankman-Fried co-founded – she is also his ex-girlfriend. Before Thursday’s sentencing, the prosecution asked Judge Kaplan to extend a harsh punishment to Bankman-Fried of at least 40 years in prison.

However, Bankman-Fried’s lawyers said differently, arguing that the former FTX head unintentionally mismanaged the company to its collapse. They argued he should not receive any more than six-and-a-half years in prison at most.

Judge Kaplan said he will issue recommendations to the Bureau of Prisons that Bankman-Fried to serve his sentence in San Francisco, where he can be close to his family, receive medical care and avoid becoming a potential target for violence.

Damian Williams, an attorney for the US Southern District of New York, praised Judge Kaplan’s sentencing in a Thursday statement.

“Today’s sentence will prevent the defendant from ever again committing fraud and is an important message to others who might be tempted to engage in financial crimes that justice will be swift, and the consequences will be severe,” Mr Williams said.

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