Bankman-Fried sentenced to 25 years in prison over FTX collapse
FTX co-founder Sam Bankman-Fried was sentenced to 25 years in prison for stealing billions of dollars from customers, marking the final chapter in a case that has upended the crypto industry.
US District Judge Lewis A. Kaplan delivered the sentence in federal court in Manhattan moments after Bankman-Fried said he was “sorry about what happened at every stage.” He was convicted last year of seven offenses, including fraud and conspiracy.
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The one-time billionaire became a symbol of malfeasance and greed in the crypto world after his hugely popular FTX exchange collapsed, exposing a yearslong fraud that swindled about $10 billion from customers, investors and lenders. Bankman-Fried, 32, had denied knowingly committing fraud and claimed he and his crypto empire were victims of market downturns in 2022.
Prosecutors had sought a sentence of as much as 50 years while Bankman-Fried’s lawyers had asked for just 6 1/2 years. While there is no parole in the federal system, he could be released a few years early for good behavior.
Kaplan dismissed Bankman-Fried’s 20-minute statement, saying he wasn’t truly remorseful and focused instead on the severity of the crime. The sentence all but ensures that the onetime wunderkind will be in prison well past his 50th birthday.
“There is a risk that this man will be in a position to do something very bad in the future,” Kaplan said. “And it’s not a trivial risk. Not a trivial risk at all.”
Bankman-Fried, in a tan prison jumpsuit with his hair grown back out in contrast to a short cut at trial, stood with his hands clasped in front of him as the judge read out the sentence. He didn’t react and kept his gaze low. His mother, Barbara Fried, looked out the window while his father, Joe Bankman, held his head in his hands.
In addition to the prison sentence, Kaplan said that Bankman-Fried should forfeit more than $11 billion. The judge said he would recommend that he is incarcerated at a facility near his parents’ home in California, noting his notoriety and autism made him more vulnerable.
While Bankman-Fried has already signaled his intention to appeal his conviction, he also has a right to challenge the sentence.
At trial, prosecutors said Bankman-Fried siphoned billions of dollars from FTX to its sister hedge fund, Alameda Research, to spend on speculative investments, more than 300 political donations and expensive real estate.
Faced with market volatility, lenders began asking for their money in 2022 and Bankman-Fried used FTX customer funds to pay them back. But a rush of customer withdrawals culminated in FTX filing for bankruptcy in November 2022, and Bankman-Fried stepping down as chief executive officer.
While prosecutors compared Bankman-Fried to Bernie Madoff who was sentenced to 150 years for a massive Ponzi scheme, his sentence is more in line with the prison term that former Enron Corp. CEO Jeffrey Skilling received for accounting fraud. He was sentenced to 24 years, though it was reduced on appeal.
“While less than the prosecutors’ request for 40 to 50 years, it is a very significant sentence,” said Mark Bini, a former federal prosecutor who is now a lawyer at Reed Smith. It “sends a message that people convicted of crimes in the crypto space will face serious consequences.”
Before sentencing, Bankman-Fried’s lawyer gave an impassioned appeal for a light sentence. Marc Mukasey praised his client’s dedication to helping others, citing the funds he raised for charity as well as the time in jail he has used to help other inmates study for general education equivalency degrees.
“Sam is an incredibly kind hearted and generous person who may not always demonstrate all the social norms but is giving and selfless beyond most norms,” Mukasey said in a hushed courtroom.
“Sam Bankman-Fried doesn’t make decisions with malice in his heart; he makes decisions with math in his head,” he said.
Bankman-Fried stared down at his hands and occasionally dabbed at his nose with the hem of his shirt as Mukasey described the former crypto mogul’s lifelong struggle to fit in. Bankman-Fried was always socially uncomfortable, and once wrote in a journal of being unable to feel happiness or pleasure, Mukasey said. His mother described her son having a “terrific sadness at his core,” the lawyer added.
“We are heartbroken and will continue to fight for our son,” Bankman-Fried’s parents said in a statement after the sentencing.
But the judge and prosecutors didn’t buy the portrayal of Bankman-Fried as a socially awkward do-gooder.
“This was a business that was pervaded with criminality throughout,” Assistant US Attorney Nicolas Roos said. “While the line sounds good it’s troubling because what it says is if Mr. Bankman-Fried thought the mathematics would justify it he’d do it again.”
During his statement, Bankman-Fried tried to pin some of the delay in customers’ being paid back on the administrators of the company after it filed for bankruptcy. He said that there were enough funds available to return their funds much more quickly.
“Mostly customers have been failed,” he said. “They’ve been failed by more people than I can count, not least of which myself. It’s been excruciating to watch all of this unfold.”
Bankman-Fried will likely be sent to a medium-security facility, according to Christopher Zoukis, a prison consultant. Zoukis said Bankman-Fried is likely to end up in FCI Herlong, near the Nevada border, or FCI Mendota, about 135 miles southeast of his parents’ house in Palo Alto.
At least one former FTX victim wasn’t content with the 25-year prison term.
“It’s a disgustingly light sentence, insulting to victims,” said Arush Sehgal, who had more than $4 million worth of assets stuck on the exchange. “Where is the justice?”
The case is US v. Bankman-Fried, 22-cr-00673, US District Court, Southern District of New York (Manhattan).
