FTX co-founder Sam Bankman-Fried will serve 25 years in prison after being convicted of defrauding his customers, investors, and lenders.
The man who presided over the largest crypto collapse in history received his sentence Thursday in a Manhattan federal court from US Judge Lewis Kaplan, who presided over Bankman-Fried’s trial last fall.
He faced up to 110 years. Prosecutors argued for a sentence of 40 to 50 years, while Bankman-Fried’s lawyers asked for six and a half years.
Sentences for white collar crimes have varied in recent years, from 150 years for Bernard Madoff to 11 years for Elizabeth Holmes.
The 32-year-old Bankman-Fried, in his final statement before the judge, said what happened at FTX “haunts me” and that “I made a lot of mistakes.”
As CEO, “I was responsible at the end of the day.”
Bankman-Fried’s defense lawyer tried to draw a distinction between his client and Madoff, who ran the largest Ponzi scheme in history.
“Madoff stole from Holocaust survivors,” his lawyer said. “That is not Sam. He did not want to personally inflict pain on anyone in any way. Sam was not a ruthless financial serial killer. He wasn’t predatory. He makes decisions with math in his head, not malice in his heart.”
Dozens of FTX victims, including those who said they lost their life’s savings due to the demise of the cryptocurrency exchange, submitted letters urging Kaplan to impose a harsh sentence.
The federal sentencing guidelines, while advisory rather than mandatory, suggest prison term enhancements that lengthen sentences as victims’ losses increase.
Kaplan had to weigh the billions that prosecutors say Bankman-Fried stole from FTX customers against claims made by FTX that those who were harmed may be fully repaid via FTX’s bankruptcy.
In January, lawyers for the defunct exchange told a Delaware bankruptcy court judge that a plan for FTX to repay customers and general unsecured creditors in full was “within reach.”
But the judge was not sympathetic to that claim, calling the assertion “misleading” and “speculative.”
Kaplan also had some strong words about Bankman-Fried before delivering his sentence, citing the “brazenness” of his actions, his “exceptional flexibility with the truth” and “his apparent lack of any remorse.”
“He knew it was wrong,” the judge added.
Rise and fall
The sentencing of Bankman-Fried completes a dramatic fall for a onetime billionaire who ran the world’s second-largest crypto exchange and was the face of a boom in digital assets during the early years of the pandemic.
His empire imploded in late 2022 as FTX filed for bankruptcy and he was arrested by authorities in the Bahamas.
His trial last fall captivated the financial world. A 12-person jury eventually sided with prosecutors who argued that Bankman-Fried deliberately stole up to $14 billion in customer deposits from his cryptocurrency exchange in a scheme that he carried out with three of his top executives.
The group, prosecutors claimed, allowed Bankman-Fried’s sister crypto trading firm Alameda Research “secret” backdoor access to FTX’s customer deposits, then spent the money on investments, loan repayments, political donations, and real estate.
“He spent his customers’ money, and he lied to them about it,” prosecutor Nicolas Roos said in the government’s closing argument.
The other three FTX executives — Alameda CEO Caroline Ellison, FTX co-founder Gary Wang, and FTX engineering director Nishad Singh — pleaded guilty to fraud charges and testified against Bankman-Fried under plea agreements with the government.
They are expected to be sentenced later in 2024.
Bankman-Fried testified that poor business decisions and management screwups — and not fraud — were to blame for the undoing of his cryptocurrency exchange.
“Did you defraud anyone?” Bankman-Fried’s lawyer, Mark Cohen, asked him during the defendant’s risky gamble to take the stand in the trial’s final days.
“No, I did not,” Bankman-Fried answered.
Thursday’s sentencing ends all criminal cases against Bankman-Fried. Prosecutors have withdrawn plans to take a separate set of charges to trial alleging Bankman-Fried committed bank fraud and bribed Chinese officials.
Bankman-Fried, however, could still appeal his conviction and sentencing.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.
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