Sam Bankman-Fried, the founder of collapsed cryptocurrency exchange FTX, has been sentenced to 25 years in prison for masterminding a fraud that cost investors, lenders and customers $11bn (£8.7bn).
At a sentencing hearing in New York, Judge Lewis Kaplan said Bankman-Fried had shown “never a word of remorse for the commission of terrible crimes” and “exceptional flexibility with the truth” during the trial. If he serves his full sentence, the one-time “Crypto King” will be 57 years old by the time he leaves prison.
Judge Kaplan told the 32-year-old, who stood in court wearing beige prison overalls, that his “punishment must fit the seriousness of the crime”.
Bankman-Fried, who had pleaded not guilty, had faced a possible sentence of up to 110 years in prison, while US prosecutors had called for between 40 and 50 years.
On Thursday, Judge Kaplan said Bankman-Fried’s crimes contributed to losses to $8bn in customers losses and around $3bn for investors and lenders. He also declared Bankman-Fried had attempted to tamper with a witness in the run up to the trial and had given false evidence to the court.
He added of Bankman-Fried’s witness testimony: “I’ve been doing this job for close to 30 years. I’ve never seen a performance like that.”
The prison term comes after Bankman-Fried was found guilty of syphoning off billions of dollars in customer funds from FTX to fund high risk investments and luxury purchases. The jury took just four hours to find him guilty on all counts in November
Speaking ahead of the sentencing, Bankman-Fried said he “made a lot of mistakes” and “caused a lot of damage”. He added: “My useful life is probably over.” His lawyers said he plans to appeal the jury verdict.
The rise of FTX, at one point valued at $32bn, made Bankman-Fried a billionaire by the age of 30. The cryptocurrency business, which enjoyed celebrity endorsements from the likes of American football star Tom Brady, was the second biggest cryptocurrency exchange prior to its collapse.
FTX filed for bankruptcy in late 2022 after a multibillion-dollar black hole was uncovered in its accounts, and Bankman-Fried was quickly arrested in the Bahamas before being extradited to the US.
During the trial, the jury heard how FTX executives engineered a secret software back door to divert customer cash for funding high risk deals at a sister hedge fund. Bankman-Fried was also accused of spending millions of pounds on property in the Bahamas and on political donations.
A self-proclaimed “effective altruist”, Bankman-Fried supposedly intended to make as much money as possible to give to good causes.
However, at last year’s trial his former friends and colleagues, including his ex-girlfriend Caroline Ellison, gave evidence against him after pleading guilty to US prosecutors.
Bankman-Fried, however, insisted on his innocence and protested he had simply made mistakes. On Thursday, he admitted customers had suffered and apologised to former colleagues, adding the failure of the business “haunts me every day”.
Bankman-Fried’s lawyers pleaded for a more lenient sentence because of their client’s alleged autism, mental health and philanthropic endeavours. Speaking to the court on Thursday, they raised his veganism during a final plea to the judge, and called the former FTX boss an “awkward math nerd” and a “beautiful puzzle”. They had suggested a penalty of less than six years behind bars.
In a filing earlier this month, they accused US officials of a “medieval view of punishment… a death in prison sentencing recommendation”. On Thursday, his lawyer, Marc Mukasey, insisted Bankman-Fried was “not a ruthless financial serial killer”.
His lawyers had insisted his crimes did not compare to those of financier Bernie Madoff, who was sentenced to 150 years in prison in 2009 for his operation of a decades-long, $65bn Ponzi scheme.
They also protested that many FTX customers would be returned much of the money they had deposited with the exchange prior to its collapse.
Despite filing for bankruptcy, many of FTX’s investments and assets have since soared in value as the price of Bitcoin has spiked. It also holds an investment in fast-growing artificial intelligence start-up Anthropic.
In sentencing remarks, Judge Kaplan dismissed this argument. He said: “The assertion that customers and creditors will be paid in full is misleading.” He added: “A thief who takes his loot to Las Vegas and successfully bets the stolen money is not entitled to a discount on the sentence by using his Las Vegas winnings to pay back what he stole.”
Many customers have had their savings locked up for over a year, disrupting their lives and putting them in financial peril.
While the value of Bitcoin has climbed in recent months to more than $70,000, the bankruptcy estate only expects to pay out customers at the price of their digital coins as of November 2022, with FTX creditors arguing they effectively be short changed.
Among hundreds of victim statements, one testified: “My whole life has been destroyed. I have two young children, one born right before the collapse. I still remember the weeks following where I would stare blankly into their eyes, completely empty inside knowing their futures have been stolen through no fault of our own.”
