Fallen Crypto Mogul Sam Bankman-Fried Sentenced To 25 Years In Prison

NEW YORK — Sam Bankman-Fried, a cryptocurrency entrepreneur, was sentenced to 25 years in jail on Thursday for orchestrating a major fraud on hundreds of thousands of consumers that culminated in the collapse of FTX, previously one of the world’s most popular platforms for exchanging digital currency.

U.S. District Judge Lewis A. Kaplan delivered a blistering critique of Bankman-Fried and his offenses before imposing a sentence that was half of what prosecutors wanted and less than a fourth of the 105 years recommended by the court’s Probation officers.

Fallen Crypto Mogul Sam Bankman-Fried Sentenced To 25 Years In Prison

“There is absolutely no doubt that Mr. Bankman-Fried’s name right now is pretty much mud around the world,” Kaplan said of the 32-year-old man who once appeared to be on top of the cryptocurrency world before his businesses collapsed in November 2022, leaving customers, investors, and lenders out of over $11 billion, which the judge ordered him to forfeit.

He was convicted of fraud and conspiracy in November, following a period of success that featured a Super Bowl advertisement and celebrity endorsements from quarterback Tom Brady, basketball player Stephen Curry, and comedian Larry David.

Kaplan issued the punishment in the same Manhattan courtroom where Bankman-Fried testified four months earlier that his objective was to transform the burgeoning bitcoin business with innovative and altruistic ideas, not to steal. The judge ruled that Bankman-Fried had frequently committed perjury by telling lies on the witness stand.

According to Kaplan, the sentence implied that “there is a risk that this man will be in a position to do something very bad in the future.” And it is not a little danger at all.” He said it was “to disable him to the extent that can appropriately be done for a significant period.”

Kaplan also advised the Federal Bureau of Prisons to transfer Bankman-Fried to a medium-security prison near San Francisco because his reputation, association with huge money, autism, and social awkwardness would make him especially susceptible in a high-security facility.

Assistant U.S. Attorney Nicolas Roos had recommended a 40- to 50-year prison sentence, saying it was the only way to assure “the defendant doesn’t do it again.”

“The defendant victimized tens of thousands of persons and businesses across numerous continents over several years. He stole money from clients who trusted him, lied to investors, forged paperwork for lenders, illegally donated millions of dollars to our political system, and paid foreign officials. “Each of these crimes deserves a lengthy sentence,” prosecutors stated in a court filing.

Prosecutors claimed Bankman-Fried misappropriated billions of dollars to fuel his quest for influence and dominance in the new industry and illegally used funds from FTX depositors to cover his expenses, which included purchasing luxury properties in the Caribbean, bribes to Chinese officials, and private planes.

Kaplan agreed with prosecutors on Thursday that Bankman-Fried should not be granted leniency only because certain investors and customers may receive compensation for their losses. He described the reasoning as “logically flawed” and “speculative.” He stated that customers lost approximately $8 billion, investors lost $1.7 billion, and lenders were shorted $1.3 billion.

Given the opportunity to speak, Bankman-Fried stood and apologized in a meandering remark: “A lot of people feel terribly let down. And they were quite disappointed. And I apologize for that. I apologize for what happened at every stage.”

He continued, “My productive life is probably finished. It’s been over for a while, since before my arrest.

Fallen Crypto Mogul Sam Bankman-Fried Sentenced To 25 Years In Prison

Bankman-Fried, dressed in his khaki prison uniform and chained at the ankles, appeared to become emotional as he spoke for approximately 20 minutes. He expressed regret for “a lot of mistakes” while shifting part of the blame to others. His customary unkempt and bushy hair had returned after the trimmed look he showed at trial.

The court then condemned his words, claiming he displayed “never a word of remorse for the commission of terrible crimes.”

Defense attorney Marc Mukasey stated that his client was misunderstood.

“Sam was not a ruthless financial serial killer who set out every morning to hurt people,” Mukasey stated in a press release. “Sam Bankman-Fried makes decisions without malice in his heart. He makes decisions using math in his thoughts.”

Bankman-Fried’s attorneys, friends, and family had pleaded for leniency, claiming he was unlikely to re-offend again. They also asserted that FTX’s investors had largely recovered their investment capital, but FTX, its creditors, and bankruptcy lawyers all refuted this.

“Mr. Bankman-Fried continues to live a life of delusion,” wrote John Ray, FTX’s CEO, who has been cleaning up the bankrupt company. “The ‘business’ he left on November 11, 2022 was neither solvent nor safe.”

Mukasey attacked a probation office suggestion of 105 years in jail two weeks earlier, calling such a sentence “grotesque” and “barbaric.”

He encouraged the judge to sentence Bankman-Fried to five to six and a half years in jail, which Mukasey claimed was a reasonable interpretation of federal sentencing guidelines.

Bankman-Fried was worth billions of dollars on paper as the co-founder and CEO of FTX, once the world’s second-largest cryptocurrency exchange.

Fallen Crypto Mogul Sam Bankman-Fried Sentenced To 25 Years In Prison

FTX enabled investors to purchase dozens of virtual currencies, ranging from Bitcoin to more obscure ones like 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 a toll on FTX, eventually leading to its demise. FTX’s hedge fund affiliate, Alameda Research, has purchased billions of dollars in various cryptocurrency bets that lost significant value in 2022. Bankman-Fried attempted to fill the gaps in Alameda’s balance sheet with FTX client monies.

Three additional members of Bankman-Fried’s close circle pled guilty to related charges and testified throughout his trial.

The most well-known of the three was Caroline Ellison, Bankman-Fried’s former lover. Ellison described Bankman-Fried as a calculated individual who was aware that directing the use of customer monies was likely a criminal act. Gary Wang and Nishad Singh, two additional former Bankman-Fried buddies, testified that they believed they were encouraged to conduct fraud by him.

SOURCE – (AP)