Sam Bankman-Fried has been sentenced to 25 years in prison over his role in the collapse of his FTX cryptocurrency exchange, after being convicted of stealing billions of dollars in customer funds to make risky bets.
The sentence handed down on Thursday by Judge Lewis Kaplan in Manhattan federal court caps the swift and dramatic downfall of a figure, who was once one of the most prominent faces in the crypto industry.
Bankman-Fried – dressed in a tan prison uniform, looking downcast and clasping his hands together – expressed remorse in a speech to the court before the sentence was read out. “I made a series of bad decisions,” he said.
“I was responsible for FTX, and its collapse is on me,” he said.
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Lawyers for the 32-year-old, who was found guilty on seven counts of fraud and money laundering last year, had pleaded for a lighter sentence of no more than six and a half years, arguing that FTX customers could be made whole in the bankruptcy process.
“There was, to be fair, a liquidity crisis, and that was in part my doing”, Bankman-Fried told the court on Thursday. “That was a mess.” But he maintained that FTX still had “enough assets to pay back...all customers in full at current prices”.
But prosecutors had pushed for a sentence of up to 50 years, claiming that Bankman-Fried was likely to reoffend if he were let out earlier. “It was not a liquidity crisis...it was the theft of billions of dollars from customers spread all over the world”, prosecutor Nicolas Roos told the judge.
Known for his cargo shorts and curly hair, Bankman-Fried was once one of the most prominent executives in crypto, hobnobbing with regulators and politicians in an effort to portray himself as the respectable face of an unruly industry.
FTX imploded in November 2022 with an $8 billion (€7.4 billion) hole in its balance sheet, in what prosecutors labelled “one of the biggest financial frauds in American history”. The crypto exchange swiftly filed for bankruptcy, and one year later, Bankman-Fried was convicted by a New York jury.
A central issue at Thursday’s hearing was how much Bankman-Fried’s crimes had cost FTX’s investors and customers. Within minutes of the hearing’s start, Kaplan shot down Bankman-Fried’s contention that there was “zero” loss as a result of his crimes, despite predictions from FTX’s bankruptcy administrators that customers with legitimate claims against the exchange “will eventually be paid in full”.
“The defendant’s assertion that FTX customers and creditors will be paid in full is misleading, it is logically flawed, it is speculative,” the judge said.
Kaplan added that by his calculations, “the loss amount readily exceeds $550 million”. He said he accepted that investors in FTX had lost $1.7 billion (€1.6 billion), lenders had lost $1 billion (€926 million) and customers $8 billion (€7.4 billion). He further concluded that Bankman-Fried had attempted to tamper with a witness in the run-up to the trial, and that he had perjured himself three times when testifying at trial.
Some of Bankman-Fried’s top lieutenants – including Nishad Singh, the former head of engineering at FTX, and Caroline Ellison, who ran an affiliated trading firm, Alameda Research – had previously pleaded guilty and testified against their former boss at trial. They have yet to be sentenced. – Copyright The Financial Times
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