Sam Bankman-Fried, the founding father of the FTX cryptocurrency alternate who was convicted of stealing billions of {dollars} from clients, was sentenced to 25 years in jail on Thursday, capping a rare saga that upended the crypto trade and have become a cautionary story of greed and hubris.
Mr. Bankman-Fried’s sentence was shorter than the 40 to 50 years that federal prosecutors had wanted a jury discovered him responsible of fraud, conspiracy and cash laundering — expenses that carried a most penalty of 110 years behind bars. However the punishment was far above the six and a half years requested by his protection attorneys.
Mr. Bankman-Fried, 32, didn’t visibly react as Choose Lewis A. Kaplan handed down the sentence in Federal District Courtroom in Manhattan. His dad and mom, the regulation professors Joe Bankman and Barbara Fried, sat two rows from the entrance, staring on the ground.
“He knew it was unsuitable. He knew it was prison,” Choose Kaplan mentioned of Mr. Bankman-Fried’s actions.
Earlier than the sentence was delivered, Mr. Bankman-Fried, cleanshaven and sporting a loosefitting brown jail uniform, apologized to FTX’s clients, buyers and workers.
“Lots of people really feel actually let down, and so they had been very let down,” he mentioned. “I’m sorry about that. I’m sorry about what occurred at each stage.” He added that his selections “hang-out” him each day.
Mr. Bankman-Fried was additionally ordered to forfeit about $11 billion in belongings.
On the sentencing, Choose Kaplan pointed to testimony from Mr. Bankman-Fried’s trial that confirmed the FTX founder’s excessive urge for food for danger, saying it was his “nature” to make colossally harmful bets. “There’s a danger that this man will likely be able to do one thing very dangerous sooner or later,” he mentioned.
Choose Kaplan additionally mentioned Mr. Bankman-Fried had lied on the witness stand and didn’t take accountability for his crimes. “He regrets that he made a really dangerous wager concerning the probability of getting caught,” he mentioned. “However he’s not going to confess a factor.”
Mr. Bankman-Fried, presently housed on the Metropolitan Detention Heart in Brooklyn, will likely be despatched to a low- or medium-security jail, the decide mentioned, very possible close to his dad and mom’ residence within the San Francisco Bay Space.
The sentencing signified the finale of a sweeping fraud case that uncovered the rampant volatility and risk-taking throughout the loosely regulated world of cryptocurrencies. In November 2022, FTX imploded nearly in a single day, erasing $8 billion in buyer financial savings. At a trial final fall, he was convicted of seven counts of fraud, conspiracy and cash laundering.
His sentence ranks as one of many longest imposed on a white-collar defendant lately. Bernie Madoff, who orchestrated a infamous Ponzi scheme that unraveled throughout the 2008 monetary disaster, acquired a 150-year sentence in 2009. He was in his 70s and died 12 years later. Elizabeth Holmes, who was convicted of defrauding buyers in her blood-testing start-up, Theranos, was sentenced to 11 years and three months in 2022.
A consultant for Mr. Bankman-Fried declined to remark. In a press release, his dad and mom mentioned, “We’re heartbroken and can proceed to battle for our son.”
Ira Lee Sorkin, the protection lawyer who represented Mr. Madoff, mentioned he was not shocked Mr. Bankman-Fried bought a stiff sentence, albeit a shorter one than his personal consumer.
“He’s 32 years previous, and he’ll see the sunshine of day,” he mentioned of Mr. Bankman-Fried. “However he’s going to spend so much of time in a cell.”
Simply 18 months in the past, Mr. Bankman-Fried was a company titan and one of many youngest billionaires on the planet. Along with his face plastered on billboards and journal covers, he might increase cash seemingly at will. He hobnobbed with actors, musicians and celebrity athletes, cultivating a picture as a nerdy do-gooder who supposed to donate all his wealth to charity.
Primarily based within the Bahamas, FTX was one of many largest marketplaces for cryptocurrencies — an easy-to-use platform the place buyers might alternate {dollars} or euros for digital cash like Bitcoin and Ether. Its valuation was north of $30 billion.
However over lower than every week in November 2022, a run on deposits uncovered an $8 billion gap in FTX’s accounts. Mr. Bankman-Fried resigned, handing over energy to a workforce of attorneys who promptly filed for chapter. The subsequent month, he was arrested at his luxurious condo within the Bahamas and charged with stealing from clients to finance billions in political contributions, charitable donations and investments in different start-ups.
The investigation moved with startling velocity for such a fancy case. Inside months, three of Mr. Bankman-Fried’s high deputies, together with a former girlfriend, pleaded responsible to fraud expenses and agreed to cooperate with prosecutors. Mr. Bankman-Fried was initially granted residence detention, however the decide revoked his bail in August after ruling that he had tried to intimidate witnesses, and despatched him to the Brooklyn detention heart.
On the trial in October, Mr. Bankman-Fried’s former colleagues testified for the prosecution, telling a jury that that they had conspired with him to loot buyer accounts. When he took the witness stand, Mr. Bankman-Fried appeared evasive at occasions, repeatedly claiming that he couldn’t bear in mind essential particulars of his FTX tenure.
“When he wasn’t outright mendacity, he was usually evasive, hairsplitting, dodging questions,” Choose Kaplan mentioned on Thursday. “I’ve by no means seen a efficiency fairly like that.”
After he was convicted, Mr. Bankman-Fried’s attorneys and household launched into a long-shot marketing campaign to safe a lenient sentence and rewrite the general public narrative about FTX’s failure. In a sentencing memo, Marc Mukasey, one of many protection attorneys, argued that Mr. Bankman-Fried had typically behaved surprisingly on the stand as a result of he was autistic. He additionally cited the mogul’s charitable initiatives, arguing that FTX was alleged to be a power for good on the earth.
However the protection’s case centered on the cash that FTX customers misplaced when the alternate went below. Since FTX’s chapter, its new leaders have cobbled collectively billions of {dollars} to return to clients, partly by liquidating stashes of digital cash and promoting Mr. Bankman-Fried’s stakes in different firms. Mr. Mukasey claimed these clients would finally be made complete via the chapter course of, placing the losses brought on by Mr. Bankman-Fried’s actions at “zero.”
The prosecutors rejected that argument. Whereas FTX’s new management has predicted that clients will finally get their deposits again, the cash they obtain will likely be equal to the greenback worth of their holdings in November 2022 — and gained’t account for a current surge within the crypto markets that despatched Bitcoin to its highest-ever worth.
Mr. Bankman-Fried “demonstrated a brazen disrespect for the rule of regulation,” prosecutors wrote in a sentencing memo. “He knew what society deemed unlawful and unethical, however disregarded that primarily based on a pernicious megalomania.”
On Thursday, Choose Kaplan mentioned of FTX’s victims: “The defendant’s assurance that they are going to be paid in full is deceptive. It’s logically flawed. It’s speculative.”
Over the previous a number of weeks, the prosecutors filed lots of of letters from FTX clients that laid out how the monetary losses had devastated their lives. One buyer mentioned the collapse had led to “suicidal ideas.”
“Sam Bankman-Fried has to suppose for the remainder of his lifetime of the multitude of lives he destroyed together with his selfishness and superficiality,” the shopper wrote. “I actually hope that justice will train him the distinction between life and video video games.”
One other FTX consumer, Sunil Kavuri, who misplaced $2 million when the corporate collapsed, testified on the listening to that the implosion had worn out cash he deliberate to spend on a home and his youngsters’s schooling.
“I’ve lived the FTX nightmare for nearly two years,” he mentioned.
When Mr. Bankman-Fried spoke, he provided a sometimes-rambling assortment of ideas, apologizing for his errors whereas insisting that FTX had sufficient belongings to make clients complete.
“I made a sequence of dangerous selections,” he mentioned, his leg shaking. “They weren’t egocentric selections. They weren’t selfless selections. They had been dangerous selections.”
Mr. Bankman-Fried has vowed to attraction his conviction, hiring a lawyer from the regulation agency Shapiro Arato Bach to supervise that effort. However in his remarks, he appeared to just accept that he could be in jail for a while.
“On the finish of the day, my helpful life might be over now,” he mentioned.
Matthew Goldstein contributed reporting.
