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Former crypto entrepreneur Sam Bankman-Fried was sentenced to 25 years in jail on Thursday for orchestrating a vast fraud on hundreds of thousands of consumers that culminated in the collapse of FTX, previously one of the world’s most popular platforms for trading digital currency.
The sentence was half of what prosecutors had requested and less than a fifth of the 105 years recommended by the court’s probation officers.
Bankman-Fried was convicted of fraud and conspiracy in November, a spectacular fall from grace after a string of successes that included congressional testimony and celebrity endorsements.
Kaplan issued the punishment in the same Manhattan courtroom where Bankman-Fried had testified four months before that he sought to revolutionize the burgeoning bitcoin business with inventive and philanthropic ideas rather than steal.
According to the judge, Bankman-Fried frequently committed perjury on the witness stand by giving testimony that was “often evasive, hair-splitting, dodging questions.”
Kaplan stated that the punishment reflected the possibility that Bankman-Fried “will be in a position to do something very bad in the future.” And it is not a little danger at all.” He stated that the punishment was designed “for the purpose of disabling him to the extent that can be done appropriately for a significant period of time.”
Kaplan advised the Federal Bureau of Prisons to send Bankman-Fried to a medium-security prison near San Francisco because his reputation, association with huge wealth, autism, and social awkwardness would make him particularly susceptible in a high-security facility.
He ordered Bankman-Fried to forfeit $11 billion to the US government.
The 32-year-old California guy apologized in a lengthy statement.
Wearing his khaki-colored prison uniform and chained at the ankles, he appeared to become emotional as he spoke for almost 20 minutes, expressing regret for “a lot of mistakes” but shifting some blame to others. His customary unkempt and bushy hair had returned after the trimmed look he showed at trial.
Bankman-Fried’s attorneys, friends, and family pleaded for leniency, claiming he was unlikely to re-offend. They also claimed that FTX’s investors had mainly recovered their monies, which was disputed by bankruptcy lawyers, FTX, and its creditors.
Prosecutors claim that since 2017, tens of thousands of people and businesses around the world have lost billions of dollars after Bankman-Fried looted his FTX customer accounts, which he promised would be safe for making illegal political donations, bribes, risky investments, buying luxury real estate in the Caribbean, and living lavishly.
FTX allowed investors to purchase dozens of virtual currencies, ranging from Bitcoin to more esoteric ones such as Shiba Inu Coin. Bankman-Fried, flush with billions of dollars in investor funds, purchased the naming rights to a Miami arena and ran a Super Bowl advertisement to promote his business.
However, the decline of cryptocurrency values in 2022 took its toll on FTX, eventually leading to its demise. FTX’s hedge fund affiliate, Alameda Research, had purchased billions of dollars in various crypto assets that lost significant value in 2022. Bankman-Fried attempted to fill the gaps in Alameda’s balance sheet with FTX client monies.
Three members of Bankman-Fried’s close circle pled guilty to related charges and testified at his trial.
