Sam Bankman-Fried, founder of cryptocurrency exchange FTX, was sentenced to 25 years in prison by a judge on Thursday, March 28, for stealing $8 billion from customers of the now-bankrupt firm, which was once regarded as one of the world’s most popular platforms for trading digital currency.
US District Judge Lewis Kaplan handed down the sentence at a Manhattan court hearing after rejecting Bankman-Fried’s claim that FTX customers did not actually lose money and that he lied during his trial testimony.
The jury found Bankman-Fried, 32, guilty on November 2 on seven fraud and conspiracy counts stemming from FTX’s 2022 collapse in what prosecutors have called one of the biggest financial frauds in US history.
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Kaplan found that FTX customers lost $8 billion, FTX’s equity investors lost $1.7 billion, and that lenders to the Alameda Research hedge fund Bankman-Fried founded lost $1.3 billion. The judge also said Bankman-Fried lied during his testimony when he said he did not know that his hedge fund had spent customer deposits taken from FTX.
Bankman-Fried’s court hearing
Bankman-Fried acknowledged during 20 minutes of remarks to the judge during the hearing that FTX customers had suffered and he offered an apology to his former FTX colleagues, but did not admit criminal wrongdoing. He has vowed to appeal his conviction and sentence.
Addressing the judge, Bankman-Fried said, “Customers have been suffering … I didn’t at all mean to minimize that. I also think that’s something that was missing from what I’ve said over the course of this process, and I’m sorry for that.” Referring to his FTX colleagues, Bankman-Fried told the judge, “They put a lot of themselves into it, and I threw that all away. It haunts me every day.”
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Three of his former close associates testified as prosecution witnesses at trial that he had directed them to use FTX customer funds to plug losses at Alameda Research. All three have pleaded guilty to fraud. During the hearing, Mukasey sought to distance his client from notorious fraudsters like Bernie Madoff.
“Sam was not a ruthless financial serial killer who set out every morning to hurt people,” Mukasey said, describing his client as an “awkward math nerd” who worked hard to get customers their money back after FTX’s collapse.
Bankman-Fried testified in his own defense that he made mistakes such as not implementing a risk management team, but denied he intended to defraud anyone or steal customers’ money. His parents, Stanford University law professors Joseph Bankman and Barbara Fried, attended the sentencing. Bankman-Fried was also was one of the biggest contributors to Democratic candidates and political causes ahead of the 2022 US midterm elections.
Bankman-Fried has been detained at the Metropolitan Detention Center in Brooklyn since August 2023, when Kaplan revoked his bail after finding he likely tampered with witnesses at least twice. Kaplan said he would recommend that Bankman-Fried be sent to a prison close to San Francisco.
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Published: 28 Mar 2024, 09:23 PM IST