Key Insights
- Sam Bankman-Fried sentenced to nearly 25 years in prison for $8 billion fraud at his FTX crypto exchange
- The 31-year-old ordered to pay back up to $11 billion to victims of one of America’s biggest financial swindles
- Judge cited Bankman-Fried’s ‘extreme’ lack of remorse, instances of perjury in imposing 24-year, 3-month term
NEW YORK (MarketsXplora) – Sam Bankman-Fried, the founder of the now-bankrupt crypto exchange FTX, was sentenced to nearly 25 years in prison on Thursday for stealing billions of dollars from investors to support his businesses and lavish lifestyle.
U.S. District Judge Lewis Kaplan in Manhattan imposed the 24-year, 3-month sentence on the 31-year-old former billionaire, and ordered him to pay back up to $11 billion to victims of one of America’s largest financial swindles. Prosecutors had sought 27 years behind bars.
The judge said Bankman-Fried committed “one of the most brazen” financial fraud cases ever, showing an “extreme” lack of remorse and “flexibility with the truth” in trying to minimise his role.
“He knew it was wrong. He knew it was criminal,” Kaplan said before handing down the sentence to a packed courtroom, where Bankman-Fried sat stone-faced in beige prison garb.
Bankman-Fried had pleaded for leniency, apologizing for making “selfish decisions” and throwing away his companies’ achievements. He called FTX co-founders Gary Wang, Caroline Ellison and Nishad Singh talented people who built “something really beautiful” that he destroyed.
“I made a series of terrible decisions,” Bankman-Fried told the court in a quivering voice. “I lost focus on protecting customers’ funds.”
But Judge Kaplan rejected the defense’s portrayal of Bankman-Fried as a well-meaning genius gone awry, citing three instances where he committed perjury during his trial in which he tried to diminish his culpability.
Bankman-Fried was convicted on Nov. 2 of twice defrauding investors at FTX and hedge fund Alameda Research, and conspiring to money launder their stolen funds.
The trial revealed how Bankman-Fried diverted billions of dollars in FTX customer funds to support Alameda and for personal luxury purchases, from real estate to $684,000 on Bahamian food trucks.
His nine-month sentence is relatively light compared to punishments meted out in other U.S. fraud cases like Ponzi scheme operator Bernard Madoff’s 150-year term and the two life sentences plus 40 years for Ross Ulbricht, who ran the online black market Silk Road.
But among crypto industry watchers, many said Bankman-Fried deserved harsher punishment. Dan Held, a general partner at venture fund Asymmetric, said the sentence was “not nearly long enough given his actions” and real damage caused to investors.
The implosion of FTX at one point wiped out $51 billion in estimated damages, marking one of the highest-profile corporate failures since Enron.
Judge Kaplan recommended Bankman-Fried serve his term at a low or medium security prison in Northern California near his family, citing concerns about his social skill deficiencies and risk of aggression from fellow inmates due to his association with “vast wealth.”
FTX is trying to recover the $8 billion hole left by Bankman-Fried’s actions. The crypto exchange’s new management has said they hope to recover all of what was lost.