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Sam Bankman-Fried Jailed for 25 Years for FTX Fraud

Last Updated 6 days ago
Teuta Franjkovic
Last Updated 6 days ago
By Teuta Franjkovic
Verified by Peter Henn

Key Takeaways

  • FTX founder Sam Bankman-Fried will go to prison for 25 years.
  • Judge Lewis Kaplan said he had “never seen a performance” like the disgraced former billionaire’s in his 30 years on the bench.
  • Bankman-Fried was responsible for the theft of $8 billion.

FTX founder Sam Bankman-Fried has been sentenced to 25 years in an American prison for defrauding customers and investors in the FTX crypto exchange.

Bankman-Fried, aged 32, was escorted into the Manhattan courtroom of U.S. District Judge Lewis Kaplan by the US Marshals Service. In November, he was convicted in a case that prosecutors described as one of the largest financial frauds in American history.

Dressed in a tan short-sleeve jail t-shirt, Bankman-Fried was seen reviewing documents alongside his defense attorney, Marc Mukasey, as they awaited the arrival of Judge Lewis Kaplan. His parents, both Stanford University law professors Joseph Bankman and Barbara Fried, had arrived earlier at the federal courthouse.

The hearing signifies the concluding phase in the dramatic fall of Sam Bankman-Fried. The 32-year-old went from being a highly affluent cryptocurrency mogul and significant political contributor to the most notable figure apprehended by American authorities targeting misconduct within the digital asset sector. Bankman-Fried has pledged to contest both his conviction and sentence.

Prosecution, Defense Clash Over FTX Founder’s Sentence

In a sentencing memorandum dated March 15, the U.S. Attorney’s office in Manhattan, which filed charges against Sam Bankman-Fried in December 2022, depicted his recent life as characterized by unparalleled greed and arrogance. They painted a picture of a man driven by ambition, who rationalized his actions and consistently gambled with the money of others.

Contrasting this portrayal, Bankman-Fried’s defense lawyer, Marc Mukasey, has advocated for a significantly lighter sentence, suggesting that less than five years and threee months would be just.

Mukasey said bankruptcy proceedings should be fully compensate FTX’s customers. He also emphasized Bankman-Fried’s efforts to retrieve funds following the collapse of the exchange in November 2022.

Marc Mukasey, defending Sam Bankman-Fried, criticized the prosecution’s sentencing memorandum in a court filing dated March 19. He argued it unfairly portrayed Bankman-Fried as a “depraved super-villain” by distorting facts to bolster its narrative. In court, he said his client was a “beautiful puzzle” who could “parse words better than a Talmudic scholar”.

FTX Customers Upset Over Potential Restitution Calculations

Additionally, several FTX customers voiced their frustration to Judge Kaplan. They were concerned  their compensation would be based on the value of their cryptocurrency holdings at the time of FTX’s bankruptcy. Their current market values could well be higher.

Bankman-Fried has been in custody at the Metropolitan Detention Center in Brooklyn since August 2023. His detention came after Judge Kaplan revoked his bail, concluding that Bankman-Fried likely engaged in witness tampering on at least two occasions, further complicating the legal proceedings against him.

From Crypto King to Alleged Con Artist

Sam Bankman-Fried, an MIT graduate, used the surge in Bitcoin and other digital currencies to amass a fortune. Forbes magazine estimated he was wort $26 billion before his 30th birthday. Bankman-Fried also had a commitment to effective altruism, a movement urging the intellectually gifted to earn a lot and give to good causes. Before the 2022 US midterm elections, he emerged as one of the most substantial donors to Democrat entities and initiatives.

However, according to prosecutors, the ethical persona Bankman-Fried projected masked a prolonged scheme of misappropriating customer funds. During his trial, testimony from three former close associates depicted him as instructing the use of FTX customer assets to cover financial gaps at his cryptocurrency-focused hedge fund, Alameda Research.

Bankman-Fried, speaking in his defense, conceded to errors such as the failure to establish a risk management team. However, he steadfastly refuted any allegations of fraud or misappropriation of customer funds.

Judge Kaplan also ordered a forfeiture of $11.02 billion, saying that some of the money would go towards Bankman-Fried’s victims.

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