We use cookies and similar technologies that are necessary to operate the website. Additional cookies are used to perform analysis of website usage. By continuing to use our website, you consent to our use of cookies. For more information, please read our Cookies Policy.

Closing this modal default settings will be saved.

Bankman-FRIED!: FTX Fraud Lands Crypto Mogul 25-Year Prison Sentence

Bankman-Fried stood with clasped hands as Kaplan read out the sentence

Owner's Profile

Staff Writer, TLR

Published on March 29, 2024, 14:29:51

313

FTX, Sam Bankman Fried, crypto, embezzelment, bankrupt

Sam Bankman-Fried was sentenced to 25 years in prison by a judge for embezzling £8 billion from customers of the now-bankrupt FTX cryptocurrency exchange he founded, marking the final chapter in the former billionaire wunderkind's dramatic downfall.

US District Judge Lewis Kaplan delivered the sentence at a Manhattan court hearing after dismissing Bankman-Fried's assertion that FTX customers hadn't genuinely lost money and accusing him of dishonesty during his trial testimony.

A jury found Bankman-Fried, 32, guilty on Nov. 2 on seven counts of fraud and conspiracy related to FTX's 2022 collapse, described by prosecutors as one of the most significant financial frauds in US history.

"He was aware it was wrongful," Kaplan remarked of Bankman-Fried before pronouncing the sentence. "He knew it was criminal. He regrets having made a very misguided bet on the likelihood of being caught. However, he refuses to admit any wrongdoing, as is his entitlement."

Bankman-Fried stood with clasped hands as Kaplan read out the sentence. Dressed in a beige short-sleeved jail t-shirt, Bankman-Fried acknowledged during a 20-minute address to the judge that FTX customers had suffered and extended an apology to his former FTX colleagues.

The sentence marked the climax of Bankman-Fried's descent from an ultra-wealthy entrepreneur and significant political donor to the most prominent target yet in a U.S. crackdown on wrongdoing in cryptocurrency markets. Bankman-Fried has pledged to appeal his conviction and sentence.

Kaplan stated he had determined that FTX customers lost £8 billion, FTX's equity investors lost £1.7 billion, and lenders to the Alameda Research hedge fund, which Bankman-Fried founded, lost £1.3 billion.

"The defendant's claim that FTX customers and creditors will be fully reimbursed is misleading, logically flawed, and speculative," Kaplan declared. "A thief who takes his spoils to Las Vegas and successfully gambles the stolen money is not entitled to a sentence reduction by utilising his Las Vegas winnings to repay what he stole."

The judge also accused Bankman-Fried of lying during his trial testimony when he denied knowledge that his hedge fund had utilised customer deposits obtained from FTX.

Federal prosecutors had sought a prison term of 40 to 50 years. Bankman-Fried's defence lawyer, Marc Mukasey, argued that a sentence of fewer than 5-1/4 years would be appropriate.

Addressing the judge, Bankman-Fried said, "Customers have been enduring... I did not mean to downplay that at all. I also believe that's something I have failed to adequately express throughout this process, and for that, I am sorry."

Speaking of his FTX colleagues, Bankman-Fried told the judge, "They invested a lot of themselves in it, and I squandered it all. It haunts me every day."
Three of his former close associates testified as prosecution witnesses at trial, asserting that he had instructed them to use FTX customer funds to cover losses at Alameda Research.

Nicolas Roos, a prosecutor with the U.S. Attorney's office in Manhattan, informed the judge, "The scale of criminality here is immense. It permeated all aspects of the business."

During the hearing, Mukasey attempted to distance his client from notorious fraudsters like Bernie Madoff. "Sam was not a heartless financial serial killer who set out every morning to harm people," Mukasey contended, portraying his client as an "awkward maths enthusiast" who diligently worked to refund customers after FTX's collapse.

"Sam Bankman-Fried doesn't make decisions out of malice," Mukasey added. "He makes decisions based on calculations." Bankman-Fried testified in his own defence, admitting to errors such as failing to implement a risk management team but denying any intent to defraud or steal customers' funds.

He was escorted into the courtroom for the hearing by members of the U.S. Marshals Service. His parents, Stanford University law professors Joseph Bankman and Barbara Fried, were in attendance.

Crypto Boom

A graduate of the Massachusetts Institute of Technology, Bankman-Fried rode the surge in the values of bitcoin and other digital assets to amass a net worth of £26 billion, according to Forbes magazine, before his 30th birthday.

Bankman-Fried became known for his wild mop of curly hair and dedication to a movement known as effective altruism, which encourages talented young individuals to focus on earning money and donating it to deserving causes. He was also one of the most significant contributors to Democratic candidates and political causes in the run-up to the 2022 US midterm elections.

However, prosecutors allege that the responsible persona he projected concealed his embezzlement of customer funds over several years. Several FTX customers have written to Kaplan expressing disappointment that they will be compensated based on the value of their cryptocurrency at the time of FTX's bankruptcy rather than the higher levels at which those assets currently trade.

Bankman-Fried has been held at the Metropolitan Detention Center in Brooklyn since August 2023, when Kaplan revoked his bail after finding evidence of witness tampering on at least two occasions.

For any enquiries or information, contact ask@tlr.ae or call us on +971 52 644 3004Follow The Law Reporters on WhatsApp Channels.

Comments