Bankman-Fried sentenced to 25 years for multi-billion dollar FTX fraud
Sam Bankman-Fried was
sentenced to 25 years in prison by a judge on Thursday for stealing $8 billion (approx. Ksh.1.06 trillion) from customers of the now-bankrupt FTX cryptocurrency exchange he founded, the
last step in the former billionaire wunderkind's dramatic downfall.
U.S. District
Judge Lewis Kaplan handed down the sentence at a Manhattan court hearing after
rejecting Bankman-Fried's claim that FTX customers did not actually lose money
and accusing him of lying during his trial testimony. A jury found
Bankman-Fried, 32, guilty on
Nov. 2 on seven fraud and conspiracy counts stemming from FTX's 2022 collapse
in what prosecutors have called one of the biggest financial frauds in U.S.
history.
Kaplan said
Bankman-Fried had shown no remorse.
"He knew it
was wrong," Kaplan said of Bankman-Fried before handing down the sentence.
"He knew it was criminal. He regrets that he made a very bad bet about the
likelihood of getting caught. But he is not going to admit a thing, as is his
right."
Bankman-Fried
stood with his hands clasped before him as Kaplan read the sentence. He was led
out of the courtroom by members of the U.S. Marshals Service when the hearing
ended.
Bankman-Fried,
wearing a beige short-sleeve jail t-shirt, acknowledged during 20 minutes of
remarks to the judge that FTX customers had suffered and he offered an apology
to his former FTX colleagues.
The sentence
marked the culmination of Bankman-Fried's plunge from an ultra-wealthy
entrepreneur and major political donor to the biggest trophy to date in a
crackdown by U.S. authorities on malfeasance in cryptocurrency markets.
Bankman-Fried has vowed to appeal his conviction and sentence.
Kaplan said he had
found that FTX customers lost $8 billion, FTX's equity investors lost $1.7
billion, and that lenders to the Alameda Research hedge fund Bankman-Fried
founded lost $1.3 billion.
"The
defendant's assertion that FTX customers and creditors will be paid in full is
misleading, it is logically flawed, it is speculative," Kaplan said.
"A thief who takes his loot to Las Vegas and successfully bets the stolen
money is not entitled to a discount on the sentence by using his Las Vegas
winnings to pay back what he stole."
The judge also
said Bankman-Fried lied during his trial testimony when he said he did not know
that his hedge fund had spent customer deposits taken from FTX.
Federal
prosecutors had sought a prison sentence of 40 to 50 years.
Bankman-Fried's defense lawyer Marc Mukasey had argued that a sentence of less
than 5-1/4 years would be appropriate.
Addressing the
judge, Bankman-Fried said, "Customers have been suffering... I didn't at
all mean to minimize that. I also think that's something that was missing from
what I've said over the course of this process, and I'm sorry for that."
Referring to his
FTX colleagues, Bankman-Fried told the judge, "They put a lot of
themselves into it, and I threw that all away. It haunts me every day."
Three of his
former close associates testified as prosecution witnesses at trial that he had
directed them to use FTX customer funds to plug losses at Alameda Research.
Nicolas Roos, a
prosecutor with the U.S. Attorney's office in Manhattan, told the judge,
"The criminality here is massive in scale. It was pervasive in all aspects
of the business."
During the
hearing, Mukasey sought to distance his client from notorious fraudsters like
Bernie Madoff.
"Sam was not
a ruthless financial serial killer who set out every morning to hurt
people," Mukasey said, describing his client as an "awkward math
nerd" who worked hard to get customers their money back after FTX's
collapse.
"Sam
Bankman-Fried doesn't make decisions with malice in his heart," Mukasey
added. "He makes decisions with math in his head."
Bankman-Fried
testified in his own defense that he made mistakes such as not implementing a
risk management team, but denied he intended to defraud anyone or steal
customers' money.
His parents,
Stanford University law professors Joseph Bankman and Barbara Fried, attended
the sentencing.
A Massachusetts
Institute of Technology graduate, Bankman-Fried rode a boom in the values of
bitcoin and other digital assets to a net worth of $26 billion, according to
Forbes magazine, before he turned 30.
Bankman-Fried
became known for his mop of unkempt curly hair and commitment to a movement
known as effective altruism, which encourages talented young people to focus on
earning money and giving it away to worthy causes. He also was one of the
biggest contributors to Democratic candidates and political causes ahead of the
2022 U.S. midterm elections.
But prosecutors
have said the responsible image he cultivated concealed his years-long embezzlement
of customer funds.
Bankman-Fried has
been detained at the Metropolitan Detention Center in Brooklyn since August
2023, when Kaplan revoked his bail after finding he likely tampered with
witnesses at least twice.
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