On Thursday, Sam Bankman-Fried entered a Manhattan courtroom to complete his criminal trial, hoping to face just a few years in prison on charges related to the collapse of his cryptocurrency exchange.
Instead, Judge Lewis Kaplan opted for a harsher sentence, sentencing the 32-year-old to 25 years in prison.
“The sentence must adequately reflect the seriousness of the crime, and this was a very serious crime,” Kaplan said.
The astonishing rise and fall of Bankman-Fried, once one of the most powerful figures in the high-flying cryptocurrency industry, has captured the public's attention, as the FTX founder went from genius billionaire to prison inmate seemingly overnight. His trial also became a referendum on the troubled sector, which collapsed in a bear market alongside the FTX failure.
Thursday's ruling marks the end of the saga, although Bankman-Fried's lawyer said he would appeal his conviction.
fall from grace
Bankman-Fried was the latest face of the cryptocurrency bull market, with his shaggy-haired face displayed on billboards and advertisements. FTX, which he founded in 2019, has grown to a valuation of more than $30 billion, attracting high-profile investors such as Sequoia Capital and Singaporean sovereign wealth fund Temasek. Bankman-Fried has also become a leading advocate for the industry, flying in from his home in the Bahamas to make frequent appearances in Washington, D.C., and push lawmakers to regulate.
Despite its rapid success, the unusual setup of FTX and its associated trading company, Alameda Research, raised red flags, with cryptocurrency trading outlet CoinDesk publishing a balance sheet in November 2022 that appeared to show Alameda's over-reliance on the company's cryptocurrency token, FTT. The whole operation collapsed that month.
As Bankman-Fried sought to rebuild his empire, details emerged about FTX transferring client deposits to Alameda to cover gaps caused by disastrous deals and lavish expenses on real estate and startup investments. At the request of US authorities, Bahamian authorities arrested Bankman-Fried in December 2022 and extradited him later that month to the United States, where the Department of Justice indicted him on criminal charges including fraud and conspiracy.
As the proceedings began, Bankman-Fried was released on bail and allowed to stay with his parents in Palo Alto, California – an arrangement that collapsed after Kaplan, who oversaw the case, discovered that Bankman-Fried had leaked documents to the police. The New York Times. The former FTX CEO has been kept at the Metropolitan Detention Center, a facility in Brooklyn notorious for its poor conditions, since August.
Bankman-Fried's jury trial began in early October, with Justice Department prosecutors and defense lawyers disagreeing over whether the collapse was the result of intentional fraud or simply a situation that got out of control. For about a month, several of Bankman-Fried's closest associates, including his former girlfriend and Alameda CEO Carolyn Ellison, took the stand, portraying him as a controlling founder who understood the crimes he was committing. On November 2, the 12-person jury sided with prosecutors, finding Bankman-Fried guilty on all seven counts. The Justice Department decided not to proceed with a second trial that would have brought additional charges including campaign finance violations.
Judgment
Although Bankman-Fried faced more than 100 years in prison, prosecutors and his defense attorneys argued for a more lenient sentence, with prosecutors asking for 40 to 50 years and his team asking for six and a half years or less.
Central to the defense's argument was the recovery of most of the money lost as part of FTX's bankruptcy, with the recent rise in cryptocurrency prices – and the disintegration of the empire's corporate network – allowing the company to potentially repay clients, at least at a later date. Crypto asset prices at the time of the collapse.
“Sam Bankman-Fried has been described as a sociopath, a man without morals, remorse or empathy, a cold manipulator, a bully and a shameless liar,” his lawyers wrote in their filings. Recommendation to Kaplan. “They don't know the real Sam Bankman Fried.”
Prosecutors – and bankrupt FTX – disagreed, saying Bankman-Fried should get a sentence “commensurate to the extraordinary dimensions of his crimes.”
During Thursday's sentencing, Bankman-Fried sat at the defense table in prison clothes, and two guards sat behind him. He spoke out before Kaplan, expressing remorse for the losses incurred by clients, though he did not admit to the crimes he was convicted of and insisted there were sufficient assets to repay FTX users in full.
“It haunts me every day,” Bankman-Fried said. “It was painful to watch it all unfold in slow motion.”
Nicholas Ross, Assistant US Attorney General, refuted Bankman-Fried's statements, saying that the collapse was not the result of mismanagement or a liquidity crisis. “It was a robbery,” Ross said.
Noting Bankman-Fried's lack of remorse, Kaplan said the sentence should reflect the crimes committed, though he disagreed with the prosecution's initial recommendation of 40 to 50 years in prison, instead sentencing Bankman-Fried to 25 years and recommending he be sent to a medium-term prison. The guard is in the San Francisco Bay Area so his parents can visit him more easily.
Bankman-Fried has 14 days to file an appeal.
