Sam Bankman-Fried, FTX founder, sentenced to 25 years in prison in crypto fraud case

Sam Bankman-Fried, FTX founder, sentenced to 25 years in prison in crypto fraud case

Former crypto mogul Sam Bankman-Fried was sentenced Thursday to 25 years in prison for his role in the 2022 collapse of FTX, which once was one of the world’s most popular platforms for trading digital currency.

Bankman-Fried, 32, was convicted on seven charges in November related to fraud and conspiracy. A jury found that Bankman-Fried illegally used money from FTX depositors to cover his expenses, which included purchasing luxury properties in the Caribbean, private planes, significant U.S. political campaign contributions and alleged bribes to Chinese officials.

U.S. District Judge Lewis A. Kaplan said the sentence reflected “that there is a risk that this man will be in position to do something very bad in the future. And it’s not a trivial risk at all.” He added that it was “for the purpose of disabling him to the extent that can appropriately be done for a significant period of time.”

Prosecutors said Bankman-Fried had cost customers, investors and lenders over $10 billion US by misappropriating billions of dollars to fuel his quest for influence and dominance in the new industry.

The prison term represents a dramatic fall from a crest of success that included a Super Bowl advertisement and celebrity endorsements from stars like quarterback Tom Brady, basketball star Stephen Curry and comedian Larry David.

WATCH | Tracing the rise and fall of Bankman-Fried:

Sam Bankman-Fried: from FTX crypto king to convict | About That

Sam Bankman-Fried went from a nobody to the CEO of the multibillion-dollar crypto currency exchange FTX, then became a convicted felon in four short years. Andrew Chang explains the rise and fall of the crypto king.

Given a chance to speak, Bankman-Fried stood and apologized in a rambling statement, saying: “A lot of people feel really let down. And they were very let down. And I’m sorry about that. I’m sorry about what happened at every stage.”

He added that, “My useful life is probably over. It’s been over for a while now, from before my arrest.”

‘A life of delusion’: current FTX CEO

Prosecutors recommended a prison sentence of 40 to 50 years. The defence was looking for a term of no longer than six years, arguing that FTX’s investors have largely recovered their funds — a claim disputed by bankruptcy lawyers, FTX and its creditors.

“Mr. Bankman-Fried continues to live a life of delusion,” John Ray, the CEO of FTX who has been cleaning up the bankrupt company, wrote in a court submission. “The ‘business’ he left on November 11, 2022 was neither solvent nor safe.”

LISTEN | Sam Bankman-Fried, The Naked Emperor (from 2023):

Front Burner26:24Front Burner Presents | The Naked Emperor | The Trial of Sam Bankman-Fried

Today we bring you a bonus episode of The Naked Emperor, our spinoff miniseries about the rise and fall of the crypto exchange FTX. As Sam Bankman-Fried’s criminal trial kicks off in New York, host Jacob Silverman is back to bring you up to speed on the latest. What’s happened at the courthouse in the lead-up to the trial? And what’s expected in the weeks to come? Joining Jacob is Zeke Faux, an investigative reporter at Bloomberg, and the author of “Number Go Up: Inside Crypto’s Wild Rise and Staggering Fall.”

Kaplan agreed with prosecutors Thursday that Bankman-Fried should not get leniency just because some investors and customers might get some of their lost money back. He called the argument “logically flawed” and “speculative.” He said customers lost about $8 billion, investors lost $1.7 billion and lenders were shorted by $1.3 billion US.

Kaplan also cited three instances where he concluded that Bankman-Fried committed perjury during his trial testimony, including when Bankman-Fried testified that he didn’t know until just weeks before FTX collapsed into bankruptcy that customer funds were being diverted to a hedge fund offshoot of FTX.

Defence lawyer Marc Mukasey said his client was misunderstood.

“Sam was not a ruthless financial serial killer who set out every morning to hurt people,” Mukasey said. “Sam Bankman-Fried doesn’t make decisions with malice in his heart. He makes decisions with math in his head.”

A bespectacled woman is shown in closeup sitting in the back seat of a vehicle.
Caroline Ellison former CEO of Alameda Research, which was founded by Sam Bankman-Fried, is shown before a Oct. 10, 2023 court appearance in New York. (Eduardo Munoz Alvarez/The Associated Press)

FTX allowed investors to buy dozens of virtual currencies, from Bitcoin to more obscure ones like Shiba Inu Coin. Flush with billions of dollars of investors’ cash, Bankman-Fried took out a Super Bowl advertisement to promote his business and bought the naming rights to an arena in Miami.

But the collapse of cryptocurrency prices in 2022 took its toll on FTX, and ultimately led to its downfall. FTX’s hedge fund affiliate, known as Alameda Research, had bought billions of dollars of various crypto investments that lost considerable amounts of value in 2022. Bankman-Fried tried to plug the holes in Alameda’s balance sheet with FTX customer funds.

Three other people from Bankman-Fried’s inner circle pleaded guilty to related crimes and testified at his trial, including Caroline Ellison, once the girlfriend of Bankman-Fried.

Ellison, sentenced to 11 years in prison in November, described Bankman-Fried as a calculating individual who knew that he was likely committing crimes when he directed the use of customer funds. 

Source link

No Comments

Sorry, the comment form is closed at this time.