On Thursday, a federal judge in the Southern District of New York sentenced Sam Bankman-Fried to 25 years in prison, citing the former FTX CEO's "clear lack of remorse," "extraordinary flexibility with the facts," and "brazen" fraud.
The sentence was about half of the 40 to 50 years prosecutors had sought.
The ruling by U.S. District Judge Lewis Kaplan came five months after a federal jury convicted Bankman-Fried on seven counts of fraud and conspiracy in connection with the November 2022 collapse of FTX.
Bankman-Fried's attorney, Mark Mukasey, said he would appeal the jury's decision. He has 14 days to appeal.
"Huge influence"
While defendants typically express remorse in order to mitigate harsh sentences, Bankman-Fried, who was wearing a beige prison jumpsuit and shackled around his ankles, occasionally spoke out as he stood to address the bench during Thursday's hearing. Make a provocative tone.
He echoed his failed defense from last November, blaming FTX’s collapse on his “mismanagement” and a “liquidity crisis” rather than outright fraud.
In asking for leniency, Bankman-Fried said "[FTX clients] would have been rewarded" had he continued to own the company.
“There are enough assets. There are enough assets. ... This is not because of the cryptocurrency price increase.”
Kaplan found this argument unpersuasive.
"A thief who brought stolen goods to Las Vegas and successfully gambled with the stolen money is not entitled to a discount on his sentence," Kaplan said at the start of the hearing.
Kaplan went on to make a scathing assessment of Bankman-Fried's character.
Citing testimony about Bankman-Fried's risk-taking tendencies, the judge chastised the 32-year-old for stealing $8 billion from FTX customers and $3 billion from the exchange's lenders and investors for his apparent lack of remorse.
"He knew it was wrong, he knew it was criminal, but he regretted that he made a very bad bet on the likelihood that he would be caught," Kaplan said.
Kaplan, who described Bankman-Fried as a "very high-achieving autistic person," said it was clear the former billionaire "wanted to be a very, very influential political figure in this country."
The judge also criticized Bankman-Fried's disastrous performance on the witness stand.
"When he wasn't outright lying, he was often evasive, nitpicking, and avoiding questions," Kaplan said. "I've been doing this for 30 years. I've never seen anything like this."
Prosecutor Nicholas Roos argued a lengthy prison sentence was necessary to prevent Bankman-Fried from committing further crimes. He cited earlier comments by Mukasey, who said his client's decision was motivated not by malice but by math.
"That's disturbing," Roos said, "because what it says is that if Mr. Bankman Fried thought the math was sound, he would do it again."
Still, he found the government's recommended sentence "far exceeds what is necessary" to deter Bankman-Fried from committing similar crimes in the future and to dissuade others from doing so.
In addition to the 25 years in prison, Kaplan fined Bankman-Fried $11 billion.
Kaplan recommended that Bankman-Fried serve his sentence in a medium- or minimum-security prison as close to his Northern California home as possible. The judge said Bankman-Fried, who has autism and is associated with great wealth, could be targeted by other inmates in a maximum-security prison for violent criminals.
The sentence is more than four times longer than what Bankman-Fried's attorneys had requested before Thursday's hearing.
In January of this year, FTX's new leadership said it expected to reimburse customers in full based on the value of their assets when FTX declared bankruptcy in November 2022.
"The most reasonable estimate of damages is zero," Bankman-Fried's attorneys wrote.
Furthermore, FTX never lost client funds to begin with – it simply lacked “liquidity.” Bankman-Fried's attorneys argued that if Bankman-Fried had more time to sell the company's assets, the company would be able to honor all customer withdrawals.
critical argument
That's a key argument for the defense because Bankman-Fried's sentence will depend heavily on federal guidelines that recommend certain prison sentences based on the amount of stolen funds.
Since the FTX crash, the market capitalization of all crypto tokens has nearly tripled, from just over $1 trillion to $2.6 trillion, according to CoinMarketCap. Customers who entrusted their cryptocurrencies to FTX now expect to be repaid in cryptocurrency, not in the U.S. dollars that represent the value of their cryptocurrencies at the time FTX filed for bankruptcy.
One of those customers, Sunil Kavuri, spoke at the sentencing. He said he had flown in from London to speak on behalf of other jilted FTX customers and called Bankman-Fried’s claims that they would be compensated “a continued lie.”
Another speaker, Florida attorney Adam Moskowitz, asked the judge for leniency because of Bankman-Fried's comments against NFL superstar quarterback Tom Brady and FTX. Help was provided in a class-action lawsuit filed by other celebrity endorsers.
FTX was at one time the largest cryptocurrency exchange in the world after Binance. FTX has attracted backing from top venture capitalists such as Sequoia Capital and was valued at $32 billion in early 2022.
Bankman-Fried courted celebrity supporters like Brady, plastered the FTX brand across sports arenas and purchased eye-catching Super Bowl television ads.
Crypto Prodigy
The crypto wunderkind has also bridged the gap with Wall Street by forging strong connections with celebrities like hedge fund manager and conference manager Anthony Scaramucci.
He has also donated millions of dollars to members of Congress and political action committees to expand his influence on Capitol Hill. It doesn't hurt that his parents are renowned law professors at Stanford University.
In Bankman-Fried, financial and political establishments finally found a face for the freewheeling cryptocurrency industry. Dressed in a rumpled T-shirt and cargo shorts with a grungy-chic look, Bankman Fried has cast himself as the latest boy-genius to make his billions through a mysterious tech-finance model.
SBF trial
However, prosecutors led by Assistant U.S. Attorney Danielle Sassoon presented a strong and persuasive narrative that portrayed Bankman-Fried as a fraudster , who used some of the oldest tricks in the book to defraud investors.
He commingled deposits, moved funds arbitrarily, and did not comply with many U.S. regulations because his companies were registered in Hong Kong and then the Bahamas.
Several former colleagues, including Caroline Ellison, testified that Bankman-Fried moved billions of dollars in FTX deposits to his crypto investment fund, Alameda Research, to cover losses in 2022.
They also told the jury that Bankman-Fried was not an idiot who knew little about the day-to-day operations of the business. By contrast, he was a hands-on manager who devised and used backdoors to falsify the accounts at both FTX and Alameda.
When the former cryptocurrency giant took the stand to testify in person, he failed. He often fails to remember the details of his tenure at FTX and Alameda. His "can't remember" riposte to prosecutors became a meme among court attendees.
It took the jury just hours to convict Bankman-Fried. Now he will spend the next 25 years paying his debt to society.
