29-3-2024 (NEW YORK) In a courtroom drama that drew the final curtain on one of the most spectacular downfalls in financial history, Sam Bankman-Fried, the former cryptocurrency wunderkind, was sentenced to 25 years in prison on Thursday for his role in the collapse of the once-mighty FTX exchange.
The sentencing, handed down by US District Judge Lewis Kaplan in a Manhattan courtroom, marked the culmination of Bankman-Fried’s precipitous fall from grace – a journey that saw the 32-year-old go from a billionaire entrepreneur and major political donor to a convicted felon facing consequences for what prosecutors have dubbed one of the biggest financial frauds in US history.
Bankman-Fried, who was found guilty in November on seven counts of fraud and conspiracy stemming from the implosion of FTX in 2022, stood before the judge in a beige prison-issued t-shirt as Kaplan delivered the 25-year sentence. The judge rejected Bankman-Fried’s claims that FTX customers did not actually lose money, and admonished him for lying during his trial testimony.
“He knew it was wrong,” Kaplan stated emphatically. “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.”
While Bankman-Fried acknowledged that FTX customers had suffered and offered an apology to his former colleagues, he stopped short of admitting criminal wrongdoing. “Customers have been suffering … I didn’t at all mean to minimise that. I’m sorry for that,” he told the court during 20 minutes of remarks.
The sentencing marked a stunning denouement for the once-lauded entrepreneur, who rode the cryptocurrency boom to amass a fortune estimated at $26 billion by Forbes magazine before his 30th birthday. Bankman-Fried’s commitment to the “effective altruism” movement, which encourages the wealthy to donate to worthy causes, had earned him a reputation as a “good guy” – a façade that Judge Kaplan dismissed as an act, declaring, “The goal was power and influence.”
The sentence also represents a significant victory for US authorities in their crackdown on malfeasance in the cryptocurrency markets. “There are serious consequences for defrauding customers and investors,” US Attorney General Merrick Garland stated, adding a stern warning: “Anyone who believes they can hide their financial crimes behind wealth and power, or behind a shiny new thing they claim no one else is smart enough to understand, should think twice.”
Kaplan found that FTX customers lost $8 billion, equity investors lost $1.7 billion, and lenders to Bankman-Fried’s Alameda Research hedge fund lost $1.3 billion. He imposed an $11 billion forfeiture order, authorising the government to repay victims with seized assets.
As Bankman-Fried was led away by US Marshals, his parents – Stanford University law professors Joseph Bankman and Barbara Fried – stood outside the courthouse, their arms around each other, offering a poignant image of a family grappling with their son’s dramatic downfall. “We are heartbroken and will continue to fight for our son,” they said in a statement.
