FTX co-founder Sam Bankman-Fried will serve 25 years in prison after being convicted of defrauding his customers, investors, and lenders.
The man who presided over the largest crypto collapse in history received his sentence today in a Manhattan federal court from US Judge Lewis Kaplan, who presided over Bankman-Fried’s trial last fall.
He faced up to 110 years. Prosecutors argued for a sentence of 40 to 50 years, while Bankman-Fried’s lawyers asked for six and a half years.
Sentences for white collar crimes have varied in recent years, from 150 years for Bernard Madoff to 11 years for Elizabeth Holmes.
Dozens of FTX victims, including those who said they lost their life’s savings due to the demise of the cryptocurrency exchange, submitted letters urging Kaplan to impose a harsh sentence.
Bankman-Fried made his own case for a more lenient sentence, saying in submissions to the court that prosecutors distorted reality by characterizing him as a “depraved super-villain” motivated by material wealth and luxuries.
Instead, his lawyers argued in a court filing, Bankman-Fried “eschews materialistic trappings” and suffers from a severe condition that causes his “near-complete absence of enjoyment, motivation, and interest.”
Bankman-Fried had one more chance in court Thursday to make a last statement, or “allocution.”
The federal sentencing guidelines, while advisory rather than mandatory, suggest prison term enhancements that lengthen sentences as victims’ losses increase.
Judge Kaplan had to weigh the billions in funds that Bankman-Fried put at risk against claims made by FTX that those who were harmed may be fully repaid.
In January, lawyers for the defunct exchange told a Delaware bankruptcy court judge that a plan for FTX to repay customers and general unsecured creditors in full was “within reach.”
Bankman-Fried’s lawyers argued that prosecutors misrepresented at trial that those customer funds simply vanished.
Rise and fall
The sentencing of Bankman-Fried completes a dramatic fall for a onetime billionaire who ran the world’s second-largest crypto exchange and was the face of a boom in digital assets during the early years of the pandemic.
His empire imploded in late 2022 as FTX filed for bankruptcy and he was arrested by authorities in the Bahamas.
His trial last fall captivated the financial world. A 12-person jury eventually sided with prosecutors who argued that Bankman-Fried deliberately stole up to $14 billion in customer deposits from his cryptocurrency exchange in a scheme that he carried out with three of his top executives.
The group, prosecutors claimed, allowed Bankman-Fried’s sister crypto trading firm Alameda Research “secret” backdoor access to FTX’s customer deposits, then spent the money on investments, loan repayments, political donations, and real estate.
“He spent his customers’ money, and he lied to them about it,” prosecutor Nicolas Roos said in the government’s closing argument.
The other three FTX executives — Alameda CEO Caroline Ellison, FTX co-founder Gary Wang, and FTX engineering director Nishad Singh — pleaded guilty to fraud charges and testified against Bankman-Fried under plea agreements with the government.
They are expected to be sentenced later in 2024.
Bankman-Fried testified that poor business decisions and management screwups — and not fraud — were to blame for the undoing of his cryptocurrency exchange.
“Did you defraud anyone?” Bankman-Fried’s lawyer, Mark Cohen, asked him during the defendant’s risky gamble to take the stand in the trial’s final days.
“No, I did not,” Bankman-Fried answered.
Thursday’s sentencing ends all criminal cases against Bankman-Fried.
Prosecutors have withdrawn plans to take a separate set of charges to trial alleging Bankman-Fried committed bank fraud and bribed Chinese officials.
Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.
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