FTX founder and former CEO Sam Bankman-Fried was sentenced to 25 years in prison for crimes associated with the downfall of his crypto exchange.
Judge Lewis Kaplan handed down the sentence Thursday morning, nearly five months after crypto’s former golden boy was found guilty on seven counts of fraud and conspiracy.
Sentencing guidelines suggested he could get up to 110 years, and prosecutors asked for 40 to 50 years. The defense had its eyes on much less — roughly five to six years — based largely on its calculation that losses experienced by investors and customers were much lower than the government estimated, and perhaps was even zero, in part due to the increase in coin values since FTX’s bankruptcy.
Current FTX CEO John Ray III, however, told Kaplan last week that Bankman-Fried’s loss calculation indicated he lived a “life of delusion,” and that it was “categorically, callously, and demonstrably false.”
Ray said FTX was “a metaphorical dumpster fire” when he began guiding its bankruptcy in November 2022. Despite optimism recently expressed by the lawyers in charge of FTX’s bankruptcy case, Ray said customers and investors “will never be returned to the same economic position they would have been in today absent [Bankman-Fried’s] colossal fraud.”
Kaplan was unswayed by the defense’s loss calculation, according to Inner City Press, which tweeted from the Brooklyn courtroom Thursday and throughout the trial.
“I reject the defense's argument about loss, both on the law and on the facts. The assertion that customers and creditors will be paid in full is misleading. Defendants equate loss with dollar volume in the bankruptcy case,” Kaplan said, according to Inner City Press. “Investors and lenders were also injured parties. The crimes here included taking FTX customer money to which defendant had no right and using it [on] speculative investments by [related company] Alameda and a variety of other things.
“A fortuitous run-up in the value of some cryptocurrencies bears no relation to the gravity of the crimes that were committed,” Kaplan said. “A thief who takes his loot to Las Vegas and successfully bets is not entitled to a sentencing reduction.”
Kaplan found the loss to be well above $550 million, the top tier for sentencing: Investors lost $1.7 billion, lenders lost $1.3 billion, and customers lost $8 billion, he said.
Kaplan also found Bankman-Fried perjured himself three times during his criminal trial: once by testifying that he didn’t know about Alameda spending FTX customer funds until fall 2022, once by saying he learned of FTX’s multibillion-dollar hole in October 2022, and once more by testifying that Alameda would have needed to borrow customer funds from FTX to repay third-party loans.
Bankman-Fried’s defense attorney Marc Mukasey implored the court to consider that his client wasn’t driven by predation or malice.
“Madoff stole from Holocaust survivors. That is not Sam,” Mukasey said in reference to the late Bernie Madoff, who orchestrated one of the biggest Ponzi schemes in U.S. history.
“[Sam] did not want to personally inflict pain on anyone in any way. Sam was not a ruthless financial serial killer,” Mukasey said. “He wasn't predatory. He makes decisions with math in his head, not malice in his heart.”
Referring to his client as “misunderstood,” “an awkward math nerd” with “off-the-chart intellect,” and a “beautiful puzzle,” he said Bankman-Fried “never sought out to be the king of crypto.”
“His mother says there's a terrific sadness at his core. His brother says, ‘Sam would be uncomfortable giving me a hug, but I know he would give me a kidney if I needed one,’” Mukasey relayed.
Speaking at his own hearing, Bankman-Fried said, “A lot of people feel really let down, and they were very let down, and I am sorry about that. I am sorry about what happened at every stage,” he said, according to The Guardian.
Assistant U.S. Attorney Nicolas Roos conceded that while Bankman-Fried isn’t a monster, he “committed gravely serious crimes that harmed many people — and he would consider doing it again.”
Kaplan said the prosecution’s 40- to 50-year suggestion was too much but highlighted how challenging Bankman-Fried was in his fall testimony.
“When not lying, he was evasive, hair-splitting, trying to get the prosecutors to rephrase questions for him. I've been doing this job for close (to) 30 years. I've never seen a performance like that,” Kaplan said before handing down the sentence.
