Fallen crypto king Sam Bankman-Fried sentenced to 25 years in prison

Bankman-Fried was convicted in November of fraud and conspiracy – a dramatic fall from a year earlier when he and his companies seemed to be riding a crest of success that resulted in a Super Bowl advertisement and celebrity endorsements from stars such as quarterback Tom Brady and comedian Larry David.

A jury found that Bankman-Fried had illegally used money from FTX depositors to cover his expenses, which included purchasing luxury properties in the Caribbean, alleged bribes to Chinese officials and private planes.

Chained at the ankles

Bankman-Fried addressed the court directly on Thursday, apologising to victims in a rambling statement, and admitting that he made “a series of bad decisions” as CEO of FTX.

“A lot of people feel really let down, and they were very let down, and I am sorry about that,” said Bankman Fried, wearing his khaki-coloured prison uniform and chained at the ankles.

“I am sorry about what happened at every stage. And there are things I should’ve done and things I shouldn’t have.”

Bankman-Fried added: “My useful life is probably over. It’s been over for a while now, from before my arrest.”

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.

FTX allowed investors to buy dozens of virtual currencies, from bitcoin to more obscure ones such as 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.

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.

In his comments on Thursday, Judge Kaplan said he found there was a loss to investors of $US1.7 billion, a loss to Alameda lenders of $US1.3 billion and a loss to FTX customers of $US8 billion.

He slapped down Bankman-Fried’s lawyers’ argument that there had been no loss to any victims saying “I reject entirely that there was no actual loss”, and said there should be no discount on sentencing based on the idea of recovering losses.

“A thief who takes his loot to Las Vegas and successfully bets the stolen money is not entitled to a discount on the sentence by using his Las Vegas winnings to pay back what he stole,” Judge Kaplan said.

Joins major fraudsters

Bankman-Fried now joins the ranks of other major fraudsters including Bernie Madoff who was sentenced in 2009 to 150 years in prison for defrauding investors out of $US64 billion.

Prosecutors earlier dropped additional charges related to Bankman-Fried’s massive campaign financing, alleging he made unlawful political donations to over 300 politicians and political action groups, amounting to more than $US100 million.

Bankman-Fried’s attorneys, friends and family had urged leniency, saying he was unlikely to reoffend again. They also say FTX’s investors have largely recovered their funds – a claim disputed by bankruptcy lawyers, FTX and its creditors.

Judge Kaplan said he would advise the Federal Bureau of Prisons to send Bankman-Fried to a medium-security prison or less near the San Francisco area, near his parents’ home because he’s unlikely to be a physical threat to other inmates or prison staff, and his autism and social awkwardness would make him vulnerable to other inmates in a high-security location.

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 probably 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 that they felt they were directed by Bankman-Fried to commit fraud.

With AP