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FTX founder Sam Bankman-Fried was sentenced to 25 years in prison on Thursday for the huge fraud and conspiracy that doomed his cryptocurrency exchange and a related hedge fund, Alameda Research.
The sentence in Manhattan federal court was significantly lower than the 40 to 50 years in prison that federal prosecutors wanted for Bankman-Fried, however it was rather more than the five to six-and-a-half years suggested by his attorneys.
“There may be a risk that this man might be in position to do something very bad in the longer term,” Judge Lewis Kaplan said before sentencing the 32-year-old and ordering him to pay $11 billion in forfeiture to the U.S. government.
“And it isn’t a trivial risk in any respect,” Kaplan added.
Kaplan noted he has never heard “a word of remorse for the commission of terrible crimes” from Bankman-Fried.
The judge said that within the 30 years on the federal bench, he had “never seen a performance” like Bankman-Fried’s trial testimony.
If Bankman-Fried was not “outright lying” during cross-examination by prosecutors, he was “evasive,” Kaplan said.
On this courtroom sketch, FTX cryptocurrency exchange founder Sam Bankman-Fried stands before U.S. District Judge Lewis Kaplan as he’s sentenced to 25 years in prison, at federal court in Latest York City on March 28, 2024.
Jane Rosenberg | Reuters
“There is totally little doubt that Mr. Bankman-Fried’s name right away is just about mud around the globe,” the judge said.
Jurors at trial likewise didn’t buy Bankman-Fried’s version of events, convicting him in November of seven criminal counts and holding him responsible for losing about $10 billion in customer money due to the securities fraud conspiracy.
Prosecutors said Bankman-Fried led a conspiracy to loot customer money to make investments, fund political donations to each Democrats and Republicans and for his personal use, in addition to to repay loans taken out by Alameda Research.
Before being sentenced, Bankman-Fried spoke contritely whilst he suggested that the billions of dollars customers lost was the results of a “liquidity crisis” or “mismanagement,” not fraud.
“Quite a lot of people feel really let down. They usually were very let down,” he said. “And I’m sorry about that. I’m sorry about what happened at every stage.”
FTX founder Sam Bankman-Fried leaves the U.S. courthouse in Latest York City on July 26, 2023.
Amr Alfiky | Reuters
“My useful life might be over,” he said while wearing a beige jailhouse jumpsuit. “It has been over for some time now since before my arrest.”
“They built something really beautiful and I threw all of that away,” he said of his co-workers at FTX, an organization once valued at $32 billion. “It haunts me each day.”
“It has been excruciating to watch this all unfold,” he told Kaplan. “Customers don’t deserve this level of pain.”
“I used to be the CEO of FTX and I used to be responsible.”
But whilst he took some responsibility, Bankman-Fried suggested that customers eventually would get back the cash they placed together with his exchange, and blamed a federal bankruptcy court for not making those customers whole yet.
Kaplan appeared to stop paying close attention at that time.
In response, Bankman-Fried crossed his arms and started rapidly tapping his right foot as he continued speaking.
On this courtroom sketch, FTX cryptocurrency exchange founder Sam Bankman-Fried sits between his defense attorneys Marc Mukasey and Torrey Young during his sentencing hearing at federal court in Latest York City on March 28, 2024.
Jane Rosenberg | Reuters
Assistant U.S. Attorney Nicolas Roos, arguing for a jail sentence of up to five a long time, scoffed at the image painted by Bankman-Fried and his lawyers.
FTX’s collapse in late 2022 was not due to “a liquidity crisis or act of mismanagement,” Roos said. “It was the theft” of billions of dollars of customer money around the globe, the prosecutor said. “It was a loss that affected people significantly.”
Bankman-Fried’s lawyer Marc Mukasey, in asking Kaplan for leniency, focused on his client’s psychological problems, noting that his mother said Bankman-Fried had “terrific sadness at his core,” which has been “a continuing presence in his life.”
Mukasey noted that Bankman-Fried once wrote in his journal that he “doesn’t feel pleasure or happiness.”
“Sam was not a ruthless financial serial killer who set out every morning to hurt people,” the lawyer said.
As an alternative, “He’s an ungainly math nerd” with a “tireless work ethic,” said the lawyer, who also compared the FTX founder to “a fantastic puzzle.”
Bankman-Fried shouldn’t be in a “four-by-four iron box,” Mukasey argued.
On this courtroom sketch, FTX founder Sam Bankman-Fried attends his sentencing hearing at federal court in Latest York City on March 28, 2024.
Jane Rosenberg | Reuters
Before he sentenced Bankman-Fried, Kaplan said he rejected “the whole thing of the defendant’s argument there was no loss” at FTX, calling that claim “misleading, logically flawed and speculative.”
Sunil Kavuri, a victim of Bankman-Fried, then talked in regards to the damage he caused.
Bankman-Fried checked out Kavuri as he described speaking to hundreds of other FTX fraud victims, several of whom are affected by depression and taking prescription medication to take care of the trauma of their losses.
“I suffered each day for the past two years,” said Kavuri. “I proceed to suffer.”
Manhattan U.S. Attorney Damian Williams, in a press release after the sentencing, said, “Samuel Bankman-Fried orchestrated one among the most important financial frauds in history.”
“His deliberate and ongoing lies demonstrated a brazen disregard for his customers’ expectations and disrespect for the rule of law, all in order that he could secretly use his customers’ money to expand his own power and influence,” Williams said.
Attorney General Merrick Garland said, “Anyone who believes they’ll hide their financial crimes behind wealth and power, or behind a shiny recent thing they claim nobody else is sensible enough to understand, should think twice.”
Bankman-Fried’s family, in a press release, said, “We’re heartbroken and can proceed to fight for our son.” Each Joseph Bankman and Barbara Fried, who’re Stanford Law professors, were sitting in the primary row of the courtroom gallery through the sentencing.
Barbara Fried and Allan Joseph Bankman, parents of FTX co-founder Sam Bankman-Fried, arrive at court in Latest York on March 28, 2024.
Yuki Iwamura | Bloomberg | Getty Images
Bankman-Fried plans to appeal his conviction and sentence.
Three other people, who all testified against Bankman-Fried at trial, are awaiting their very own sentencings after pleading guilty to criminal charges related to FTX and Alameda Research.
They’re Caroline Ellison, the Alameda Research CEO who at one time dated Bankman-Fried; FTX engineering chief Nishad Singh; and Gary Wang, the co-founder and chief technology officer of FTX.
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