Sam Bankman-Fried: FTX founder sentenced to 25 years in prison for billion-dollar crypto fraud

Crypto entrepreneur Sam Bankman-Fried has been sentenced to 25 years in prison on Thursday (March 28). The 32-year-old was jailed for billion-dollar fraud that unravelled with the collapse of FTX, once one of the world’s most popular platforms for exchanging digital currency.

Bankman-Fried, the co-founder and CEO of FTX, was convicted in November of fraud and conspiracy, a dramatic fall from a year earlier when his companies seemed to be on a crest of success. US District Judge Lewis A Kaplan agreed with prosecutors 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”. The jury found that Bankman-Fried illegally used money from FTX depositors to cover his expenses, including purchasing luxury properties in the Caribbean, alleged bribes to Chinese officials, and private planes as the prosecutors recommended a prison sentence of 40 to 50 years.

Bankman-Fried's attorneys, friends, and family have urged leniency, saying he is unlikely to reoffend again, and that FTX’s investors have largely recovered their fund. However, this claim h as been disputed by bankruptcy lawyers, FTX, and its creditors. The trial also heard that Bankman-Fried was worth billions of dollars on paper as the co-founder and CEO of FTX, which was the second-largest cryptocurrency exchange in the world at one time. The collapse of cryptocurrency prices in 2022 took its toll on FTX, and ultimately led to its downfall.

FTX’s hedge fund affiliate, Alameda Research, had bought billions of dollars of various crypto investments that lost considerable amounts of value in 2022. Bankman-Fried then 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. The biggest name among the three was Caroline Ellison, once the girlfriend of Bankman-Fried. Ellison described Bankman-Fried as a calculating individual who knew that he was likely committing crimes when he directed the use of customer funds. Two other one-time friends of Bankman-Fried: Gary Wang and Nishad Singh, also testified they felt they were directed by Bankman-Fried to commit fraud.

Given a chance to speak, Bankman-Fried stood and apologised in a rambling statement. He said: “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.”

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