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Former FTX CEO Sam Bankman-Fried Sentenced to 25 Years in Prison for Financial Fraud, Must Forfeit $11 Billion to Victims
A judge sentenced Sam Bankman-Fried to 25 years in prison on Thursday for orchestrating what prosecutors called a one of the biggest financial frauds in American history.
He will also have to forfeit $11 billion that the government can use to compensate victims, Judge Lewis Kaplan said.
“It was a very serious crime,” Kaplan said.
Bankman-Fried, 32, stood with his hands clasped in front of him, looking down, as the sentence was pronounced.
Bankman-Fried was sentenced last November He was convicted of two counts of wire fraud conspiracy, two counts of wire fraud and one count of conspiracy to commit money laundering, each carrying a maximum sentence of 20 years in prison. He was also convicted of conspiracy to commit commodities fraud and conspiracy to commit securities fraud, each carrying a maximum sentence of five years in prison.
He was accused of using customer deposits on cryptocurrency trading platform FTX, the company he founded, to cover losses at his hedge fund, repay loans and buy lavish real estate, among other personal expenses.
Prosecutors had said he deserved 40 to 50 years in prison because of “the enormous scale of the fraud,” although Kaplan said that was too excessive.
The judge determined that Bankman-Fried’s scheme defrauded FTX customers out of $8 billion and said the sentence was intended to “prevent” him from committing further fraud for an extended period of time.
“There is a risk that this man is in a position to do something very bad in the future and it is not a negligible risk. It is not a negligible risk at all,” Kaplan said.
“Mr. Bankman-Fried had long known that Alameda was spending significant amounts of FTX client funds on risky investments, political contributions, real estate in the Bahamas and other things in circumstances where FTX was seriously exposed to market downside, long-term call options and other risks,” Kaplan said. “He knew that FTX client funds were not to be used for these purposes. They were not his.”
Bankman-Fried admitted some of his own failings, but the judge appears to have found his statements insufficient.
“I thought one of his most powerful expressions was, ‘I did something stupid.’ But never a word of remorse for committing terrible crimes,” Kaplan said.
The judge also questioned the image Bankman-Fried cultivated among government officials.
“He presented himself as a good man who supported proper regulation of the cryptocurrency industry. In my opinion, that was an act,” Kaplan said.
FTX founder Sam Bankman-Fried leaves U.S. federal court in New York on February 16, 2023. Timothy A. Clary/AFP via Getty Images, FILE
After the sentencing, Attorney General Merrick Garland said those who defraud customers and investors face “serious consequences.”
“Anyone who thinks they can hide their financial crimes behind wealth and power, or behind some shiny new thing they claim no one else is smart enough to understand, should think again,” he said in a statement.
U.S. Attorney Damian Williams, whose office prosecuted the case, said the sentence would deter Bankman-Fried from committing fraud again and would also serve as “an important message to others who might be tempted to commit financial crimes that justice will be swift and the consequences will be severe.”
In response to the sentencing, Bankman-Fried’s parents said in a statement to ABC News that they were heartbroken and would continue to fight for our son.
Bankman-Fried, of Stanford, Calif., addressed the court before sentencing, standing at the defense table with his arms crossed in front of him, looking down and mumbling often.
He acknowledged that his “mismanagement” led to the closure of Alameda, his private hedge fund, after its initial success and said he had “let down everyone and everything I held dear as well.”
“I threw everything away. It haunts me every day,” he said. “I made a series of bad decisions. They weren’t selfish decisions, they weren’t altruistic decisions, they were bad decisions.”
Bankman-Fried also acknowledged that FTX customers have not been compensated. “The customers, the creditors, the lenders, they haven’t been reimbursed,” he said. “It’s caused a lot of damage.”
Sunil Kavuri, a London-based technology investor at Shomei Group, addressed the court on Thursday before the sentencing on behalf of 200 victims, he said.
“I suffered every day,” Kavuri said. “It’s a constant lie that we are all healed.” [through bankruptcy payments]He added that he had “been taken away the money I wanted to spend on a family home”.
Kavuri told the court he knew FTX victims who suffered from depression and he said some victims had committed suicide.
More than $8 billion in client money was embezzled, “placing this crime in a category of cases that can be counted on the fingers of one hand,” prosecutors said. In addition, Bankman-Fried “victimized tens of thousands of individuals and businesses, on multiple continents, over a period of years. He stole money from clients who entrusted it to him; he lied to investors; he sent falsified documents to lenders; he injected millions of dollars in illegal donations into our political system; and he bribed foreign officials.”
Judge Kaplan on Thursday immediately rejected Bankman-Fried’s claim that his fraud was not $8 billion as prosecutors had claimed.
“Defendant’s argument rests on what amounts to an assumption that FTX’s customers will be compensated in the bankruptcy,” Kaplan said before issuing the sentence. “Defendant’s assertion that FTX’s customers and creditors will be paid in full is misleading; it is logically flawed.”
Bankman-Fried resigned from his role at FTX in November 2022 following a rapid collapse that ended with the company – once valued at $32 billion at its peak – declaring bankruptcy.
Assistant U.S. Attorney Nicholas Roos said a harsh sentence for Sam Bankman-Fried was warranted because “the defendant may commit crimes again.”
The prosecutor stressed that Bankman-Fried had “not sworn not to do it again” when he addressed the court.
“A sentence of at least 40 years is necessary to ensure that the defendant cannot do this again,” Roos said.
The prosecutor spoke of victims who lost everything because they trusted Bankman-Fried when he told them, via social media or another platform, that their money was safe.
“The defendant is not a monster, but he committed very serious crimes,” Roos said. “The criminality here is very large, it is pervasive in every aspect of the company. This was not a great company that had problems at the end. It was overrun with fraud.”
Former FTX CEO Sam Bankman-Fried, who is charged with fraud following the collapse of the bankrupt cryptocurrency exchange, walks outside Manhattan federal court in New York, U.S., March 30, 2023. Amanda Perobelli/Reuters, FILE
Before sentencing Thursday, defense attorneys called the government’s request for 40 to 50 years in prison “barbaric” and argued that Bankman-Fried deserved about six years in prison because of his “deep regret for the pain he has caused.” They also said that “the harm to customers, lenders and investors is nil.”
Defense attorney Mark Mukasey insisted Thursday that Bankman-Fried possessed compassion, empathy and generosity and that “really, he’s a clumsy math nerd.”
“He loves video games and veganism,” Mukasey told the court. “He’s compassionate toward animals and children. He has a tireless work ethic. He has an intellect that is completely off the charts and mind-blowing.”
Although his fraud has been compared to Bernie Madoff’s Ponzi scheme, Mukasey said the 32-year-old was not a hard-core financial assassin.
“That level of depravity doesn’t exist in this case. I don’t think it’s present in Sam’s heart,” Mukasey said. “Sam is at the opposite end of the culpability spectrum.”
The lawyer added: “Sam never ran away with billions of dollars in a Swiss bank account or under his mattress.”
Prosecutors have given a different interpretation of the Bankman-Fried case.
“With all the advantages of a comfortable education, an MIT education, a prestigious early career in finance, and a valuable idea for a start-up, Bankman-Fried could have pursued the rewarding, productive, and altruistic life he outlined in his sentencing motion. But instead, his life in recent years has been one of unparalleled greed and arrogance, ambition and rationalization, risk-seeking and repeated gambles with other people’s money,” prosecutors said.
Bitcoin has surpassed the $63,000 mark for the first time since November 2021. (Chesnot via Getty Images)
Bitcoin has broken above the $63,000 (£49,745) mark for the first time since November 2021, when the digital asset hit its all-time high of over $68,000.
Over the past 24 hours, the value of the largest digital asset by market capitalization has increased by more than 8% to trade at $63,108, at the time of writing.
Learn more: Live Cryptocurrency Prices
The price appreciation was fueled by record inflows into several U.S.-based bitcoin cash exchange-traded funds (ETFs), which were approved in January this year.
A Bitcoin spot ETF is a financial product that investors believe will pave the way for an influx of traditional capital into the cryptocurrency market. Currently, indications are favorable, with fund managers such as BlackRock (BLK) and Franklin Templeton (BEN), after allocating a record $673 million into spot Bitcoin ETFs on Wednesday.
Learn more: Bitcoin’s Success With SEC Fuels Expectations for an Ether Spot ETF
The record allocation surpassed the funds’ first day of launch, when inflows totaled $655 million. BlackRock’s iShares Bitcoin Trust ETF (I BITE) alone attracted a record $612 million yesterday.
Bitcoin Price Prediction
Earlier this week, veteran investor Peter Brandt said that bitcoin could peak at $200,000 by September 2025. “With the push above the upper boundary of the 15-month channel, the target for the current market bull cycle, which is expected to end in August/September 2025, is raised from $120,000 to $200,000,” Brandt said. published on X.
The influx of capital from the traditional financial sphere into Bitcoin spot ETFs is acting as a major price catalyst for the digital asset, but it is not the only one. The consensus among analysts is that the upcoming “bitcoin halving” could continue to drive flows into the bitcoin market.
The Bitcoin halving is an event that occurs roughly every four years and is expected to happen again next April. The halving will reduce the bitcoin reward that miners receive for validating blocks on the blockchain from 6.25 BTC to 3.125 BTC. This could lead to a supply crunch for the digital asset, which could lead to price appreciation.
The story continues
Watch: Bitcoin ETFs set to attract funds from US pension plans, says Standard Chartered analyst | Future Focus
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Forensic Risk Alliance (FRA), an independent consultancy specializing in regulatory investigations, compliance and litigation, has welcomed U.S.-based cryptocurrency specialist Thomas Hyun as a director of the firm’s global cryptocurrency investigations and compliance practice. Hyun brings to the firm years of experience building and leading anti-money laundering (AML) compliance programs, including emerging payment technologies in the blockchain and digital asset ecosystem.
Hyun has nearly 15 years of experience as a compliance officer. Prior to joining FRA, he served as Director of AML and Blockchain Strategy at PayPal for four years. He established PayPal’s financial crime policy and control framework for its cryptocurrency-related products, including PayPal’s first consumer-facing cryptocurrency offering on PayPal and Venmo, as well as PayPal’s branded stablecoin.
At PayPal, Hyun oversaw the second-line AML program for the cryptocurrency business. His responsibilities included drafting financial crime policies supporting the cryptocurrency business, establishing governance and escalation processes for high-risk partners, providing credible challenge and oversight of front-line program areas, and reporting to the Board and associated authorized committees on program performance.
Prior to joining PayPal, Hyun served as Chief Compliance Officer and Bank Secrecy Officer (BSA) at Paxos, a global blockchain infrastructure company. At Paxos, he was responsible for implementing the compliance program, including anti-money laundering and sanctions, around the company’s digital asset exchange and its asset-backed tokens and stablecoins. He also supported the company’s regulatory engagement efforts, securing regulatory approvals, supporting regulatory reviews, and ensuring compliance with relevant digital asset requirements and guidelines.
Thomas brings additional experience in payments and financial crime compliance (FCC), having previously served as Vice President of Compliance at Mastercard, where he was responsible for compliance for its consumer products portfolio. He also spent more than seven years in EY’s forensics practice, working on various FCC investigations for U.S. and foreign financial institutions.
Hyun is a Certified Anti-Money Laundering Specialist (CAMS) and a Certified Fraud Examiner (CFE). He is a graduate of New York University’s Stern School of Business, where he earned a bachelor’s degree in finance and accounting. Additionally, he serves on the board of directors for the Central Ohio Association of Certified Anti-Money Laundering Specialists (ACAMS) chapter.
Commenting on his appointment, Hyun said, “With my experience overseeing and implementing effective compliance programs at various levels of maturity and growth, whether in a startup environment or large enterprises, I am excited to help our clients overcome similar obstacles and challenges to improve their financial crime compliance programs. I am excited to join FRA and leverage my experience to help clients navigate the complexities of AML compliance and financial crime prevention in this dynamic space.”
FRA Partner, Roy Pollittadded: “As the FRA’s sponsor partner for our growing Cryptocurrency Investigations and Compliance practice, I am thrilled to have Thomas join our ever-expanding team. The rapid evolution of blockchain and digital asset technologies presents both exciting opportunities and significant compliance challenges. Hiring Thomas in a leadership role underscores our commitment to staying at the forefront of the industry by enhancing our expertise in anti-money laundering and blockchain strategy.”
“Thomas’ extensive background in financial crime compliance and proven track record of building risk-based FCC programs in the blockchain and digital asset space will be invaluable as we continue to provide our clients with the highest level of service and innovative solutions.”
“FRA strengthens cryptocurrency practice with new director Thomas Hyun” was originally created and published by International Accounting Bulletina brand owned by GlobalData.
The information on this website has been included in good faith for general information purposes only. It is not intended to amount to advice on which you should rely, and we make no representations, warranties or assurances, express or implied, as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our website.
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Bitcoin fell in line with the broader cryptocurrency market, with ether and other altcoins also falling.
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Financial markets were weighed down by risk-off sentiment ahead of the Fed’s interest rate decision and press conference later in the day.
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10x Research said it is targeting a price target of $52,000 to $55,000, anticipating further selling pressure.
Bitcoin {{BTC}} was trading around $57,700 during European morning trading on Wednesday after falling to its lowest level since late February, as the world’s largest cryptocurrency recorded its worst month since November 2022.
BTC has fallen about 6.3% over the past 24 hours, after breaking below the $60,000 support level late Tuesday, according to data from CoinDesk. The broader crypto market, as measured by the CoinDesk 20 Index (CD20), lost nearly 9% before recovering part of its decline.
Cryptocurrencies have been hurt by risk-off sentiment in broader financial markets amid stagflation in the United States, following indications of slowing growth and persistent inflation that have dampened hopes of an interest rate cut by the Federal Reserve. The Federal Open Market Committee is due to deliver its latest rate decision later in the day.
Ether {{ETH}} fell about 5%, dropping below $3,000, while dogecoin {{DOGE}} led the decline among other major altcoins with a 9% drop. Solana {{SOL}} and Avalanche {{AVAX}} both lost about 6%.
Bitcoin plunged in April, posting its first monthly loss since August. The 16% drop is the worst since November 2022, when cryptocurrency exchange FTX imploded, but some analysts are warning of further declines in the immediate future.
10x Research, a digital asset research firm, said it sees selling pressure toward the $52,000 level due to outflows from U.S. cash exchange-traded funds, which have totaled $540 million since the Bitcoin halving on April 20. It estimates that the average entry price for U.S. Bitcoin ETF holders is $57,300, so this could prove to be a key support level.
The closer the bitcoin spot price is to this average entry price, the greater the likelihood of a new ETF unwind, 10x CEO Markus Thielen wrote Wednesday.
“There may have been a lot of ‘TradeFi’ tourists in crypto – pushing longs all the way to the halving – that period is now over,” he wrote. “We expect more unwinding as the average Bitcoin ETF buyer will be underwater when Bitcoin trades below $57,300. This will likely push prices down to our target levels and cause a -25% to -29% correction from the $73,000 high – hence our $52,000/$55,000 price target over the past three weeks.”
The story continues
UPDATE (May 1, 8:56 UTC): Price updates throughout the process.
UPDATE (May 1, 9:57 UTC): Price updates throughout the process.
UPDATE (May 1, 11:05 UTC): Adds analysis from 10x.
Hello from Austin, where thousands of crypto enthusiasts braved storms and scorching heat to attend Consensus. The industry’s largest and longest-running conference, which can sometimes feel like a religious revival, offers opportunities to chat and listen to leading names in crypto. And for the casual observer, Consensus offers a useful glimpse into the mood of an industry prone to wild swings in fortune.
Unsurprisingly, the mood is noticeably more positive than it was a year ago, when crowds were sparse and many attendees were quietly confiding that they were considering switching to AI. In practice, that means some of the more obnoxious elements are back, but not to the level of Consensus 2018 in New York, when charlatans parked Lamborghinis outside the event and the hallways were lined with booth girls and scammers pitching “ICOs in a box.”
This time around, Elon Musk’s Cybertrucks have replaced Lamborghinis as the vehicle of choice for marketers. One of the most notable publicity stunts was a startup that paid a poor guy to parade around in the Texas sun in a Jamie Dimon costume, wig, and mask, and then staged a mock assault on him by memecoin characters.
Outside the event was a giant “RFK for President” truck, while campaign staffers manned a booth instead — a reflection of both the election year and crypto’s willingness to latch onto any candidate, no matter how outlandish, who will talk about the industry. RFK himself is scheduled to address the conference on Thursday.
Excesses aside, the general sense of optimism was understandable. The cryptocurrency market has not only recovered from the wave of fraud that nearly sank it in 2022, it is riding a new wave of political legitimacy. This month, cryptocurrencies scored once-unthinkable political victories in Washington, D.C., and there is a sense that the industry has not only withstood the relentless regulatory assaults of SEC Chairman Gary Gensler and Sen. Elizabeth Warren, but is poised to defeat them.
And while cryptocurrency is still searching for its flagship application, the optimists I spoke with pointed to signs that it is (once again) upon us. Those signs include the rapid advancement of zero-knowledge proofs as well as the popularity of Coinbase’s Base blockchain and, perhaps most importantly, the large-scale arrival of traditional finance into the world of cryptocurrencies – a development that not only provides a major financial boost, but also a new element of stability and maturity that will, perhaps, tame the worst of crypto’s wilder side. Finally, this consensus marked the end of the Austin era as the conference, under new leadership, will be held in Toronto and Hong Kong in 2025.
The story continues
Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts
This story was originally featured on Fortune.com
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