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Sam Bankman-Fried sentenced to 25 years in prison for his role in the collapse of crypto exchange FTX
Former cryptocurrency billionaire Sam Bankman-Fried was sentenced Thursday to 25 years in prison for his role in committing one of the largest financial crimes in U.S. history.
Bankman-Fried, 32, was sentenced in November of seven counts of fraud, conspiracy and money laundering, as well as other charges of conspiracy to commit commodities and securities fraud.
Bankman-Fried faced up to 110 years in prison under federal sentencing guidelines, but prosecutors had asked Judge Lewis Kaplan to sentence Bankman-Fried between 40 and 50 years old in prison for what they described as a “historic fraud”. Bankman-Fried’s lawyers had argued for a maximum sentence of six and a half years, saying it was unlikely he would reoffend.
At Thursday’s hearing, Kaplan said the 25-year sentence reflects “that there is a risk that this man will be able to do something very bad in the future. And that’s not quite a harmless risk.” The judge added that this was “with the aim of disabling him to the extent that it can be done appropriately for a significant period of time.”
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Damian Williams, United States Attorney for the Southern District of New York, said that the sentence sends “an important message to those who might be tempted to engage in financial crimes: justice will be swift and the consequences will be serious.”
Former FTX CEO Sam Bankman-Fried walks outside Manhattan federal court in New York on March 30, 2023. Amanda Perobelli/Reuters
Bankman-Fried’s lawyers argued that their client never intended to defraud his clients and therefore Judge Kaplan should show leniency.
“Sam was not a ruthless financial serial killer who set out every morning to harm people,” defense lawyer Marc Mukasey said, Reuters reported. Mukasey described his client as a “math-clumsy nerd” who tried to return clients’ money to them after FTX collapsed, according to the report.
Although Bankman-Fried is expected to appeal her conviction, former federal prosecutor Andrey Spektor said there was little chance the verdict would be overturned. “There’s nothing anyone can do about it,” Spektor said, adding that while Bankman-Fried could have received an even longer sentence, “I don’t think SBF and his family are celebrating a 25-year term.”
Some legal experts believed Bankman-Fried’s education and professional connections would provide some leniency, while others expected a harsher sentence.
“I guess I was a little in between. I immediately realized that this time – and this crime – was different, that the judge was going to hold him accountable for his actions,” said sAnat Alon-Beck, professor of business law at the State University of New York. Case Western University Reserve.
Alon-Beck compared Bankman-Fried’s sentence to that of disgraced Silicon Valley entrepreneur Elizabeth Holmes, who is serving an 11.5-year prison sentence for defrauding investors. “In SBF’s case, the punishment was more than doubled,” Alon-Beck said.
During the sentencing hearing, Bankman-Fried apologized to his former colleagues at FTX, Reuters reported. “They put a lot of themselves into this, and I threw it all away. It haunts me every day,” Bankman-Fried told the judge, adding: “I’m sorry for that. I’m sorry for what happened at every step. Things I should have done and said, things I shouldn’t have.”
Sam Bankman-Fried’s parents, Barbara Fried and Joseph Bankman, leave a Manhattan courtroom on March 28, 2024, after the FTX co-founder was sentenced to 25 years in prison for fraud linked to the collapse of the cryptocurrency trading platform. TIMOTHY A. CLARY/AFP via Getty Images
Bankman-Fried’s conviction last fall followed the FTX Surprising Collapse in 2022, the cryptocurrency trading platform he co-founded and led as CEO, amid an $8 billion fund shortfall. At trial, he was accused of using depositors’ money to prop up his struggling hedge fund, as well as using the funds to purchase luxury properties in the Caribbean and to make donations to various causes.
FTX was once the world’s second-largest cryptocurrency exchange, allowing users to buy and sell dozens of virtual currencies, while Bankman-Fried’s wealth was estimated at more than $30 billion. With billions of dollars in liquidity from investors, Bankman-Fried took a Super Bowl commercial to promote FTX and purchased the naming rights to an arena used by the NBA’s Miami Heat.
But the collapse of cryptocurrency prices in 2022 crippled FTX and ultimately led to its crash. FTX’s hedge fund subsidiary, Alameda Research, has made billions of dollars in crypto investments that have plunged in value. Prosecutors said Bankman-Fried attempted to shore up Alameda’s balance sheet with funds from FTX clients.
Three former FTX associates testified against Bankman-Fried after pleading guilty to related crimes. Among them were Caroline Ellison, Bankman-Fried’s former romantic partner, who claimed that he put pressure on her commit fraud.
—The Associated Press contributed to this report.