Sam Bankman-Fried sentenced to 25 years in prison for a business he founded with a crypto-currency hedge fund
A US federal judge in the Southern District of New York has sentenced Sam Bankman-Fried, founder of bankrupt crypto exchange FTX, to 25 years in prison. In addition, Bankman-Fried has been ordered to forfeit $11 billion.
The sweeping conviction marked a stunning fall for the 32-year old former CEO who once hobnobbed with celebrities like quarterback Tom Brady and shared stages with world leaders like former President Clinton.
The seriousness of the crime is reflected in the judgment. This was a very serious crime,” said Judge Lewis Kaplan, who presided over the case, before delivering the sentence. He said that Bankman-Fried’s actions caused a huge amount of harm, and his flexibility with the truth made him stand out.
All in all, at least $8 billion in customer funds were believed to have been stolen. Prosecutors argued the money was used to fuel a lavish and luxurious lifestyle in the Bahamas, as well as for other purposes, like political lobbying and investing in other companies.
Prosecutors are asking for roughly half of what the guidelines suggest, though it’s possible they may end up with more.
The fate of the former FTX CEO: Justice for the naivety of a depraved computer whiz
Ultimately, the decision will be up to Kaplan, a judge who has ruled in high-profile cases including most recently presiding over E. Jean Carroll’s defamation case against former president Trump.
Kaplan was unmoved during sentencing. Recapping the trial, he said that Bankman-Fried knew FTX was seriously exposed to risk, that the customer funds weren’t his to use, and that he was well aware that what he was doing was wrong. Kaplan said Bankman-Fried justified his actions by weighing the cost of getting caught against the cost of being away with it.
Kaplan will have to consider the central question: Was Bankman-Fried really a criminal mastermind or a young computer whiz?
Bankman-Fried’s lawyers said that the prosecutors sentence recommendation wrongly portrayed the former FTX head as a depraved super villain.
“The judge is going to be thinking about how he can punish, send a message both to Mr. Bankman-Fried and to the community that will be deterrent and satisfy the goal of punishment,” she said. “But at the same time, balance the need to give this very young person an opportunity to rehabilitate and have a life.”
Many of FTX’s holdings are in cryptocurrencies and other companies that are in the process of being sold off.
FTX’s Sam Bankman-Fried, 71, has been convicted of witness tampering and is not guilty of a single-offence charge
“It doesn’t matter that someone is able to recover the funds that they’ve taken, or stolen, or lost,” he said. “That’s nice. It’s a great thing for recovery, but it doesn’t diminish the amount of the loss.”
Before announcing the sentence, Inner City Press reports that Judge Kaplan called the defense’s claims that people would be paid back speculative, finding that customers of FTX lost $8 billion and that Bankman-Fried attempted to tamper with witnesses, perjured himself, and falsely testified about when he learned of the missing $8 billion.
Kaplan said, even though FTX has a jump in the value of its holdings or stake in Anthropic, a thief who goes to Las Vegas and succeeds in gambling away the loot is not entitled to a discount.
There was evidence that Sam wasn’t sorry for what he did, despite his lawyers saying in the sentencing filing that they were sorry for the pain he caused.
Bankman-Fried is already in custody; he’s been residing in the Metropolitan Detention Center (MDC) since August 11th, 2023, because he violated his bail conditions. His coconspirator and ex-girlfriend sent their private memos to The New York Times. At the time, Kaplan said Bankman-Fried had engaged in witness tampering “at least twice.” Bankman-Fried has lost weight in jail because he didn’t have a vegan diet and was subjected to multiple extortion attempts, according to his lawyers.
The probation department recommended 100 years in prison, which Bankman-Fried’s lawyers called “grotesque.” They argued that because of his age, Bankman-Fried’s case was substantially different than that of Bernie Madoff, who was sentenced to 150 years for his Ponzi scheme. Because Madoff was 71, his sentence was “in many ways symbolic.” He died in jail after serving 12 years.
“The defendant is considered as a whole by the court—for his good and his bad,” says Joshua Naftalis, a former US prosecutor and partner at law firm Pallas Partners. If the aim of the trial is to determine a snapshot of a person’s behavior, then the sentencing aim is to take a full measure of the man.
How a Judge Can Evaluate Bankman-Fried’s Delta Judicial Charges”: A Case Study of a Financial Fraud
The affair was described by the US government as one of the largest financial frauds in history. Bankman-Fried had demonstrated a blatant disrespect for the rule of law.
In considering the appropriate sentence for Bankman-Fried, the judge was required to take into account a blend of factors beyond the details of the underlying crimes. Those include the extent of the financial losses dealt upon the victims, the defendant’s character and history, whether any obstruction of justice had taken place, the likelihood of recidivism, and so forth.