Fraudster crypto king Sam Bankman-Fried’s huge jail sentenced after $12 billion fraud
Sam Bankman-Fried, who built a crypto empire worth billions, has been handed a massive jail sentence after he defrauded his customers.
Corrupt crypto king Sam Bankman-Fried will spend a quarter of a century behind bars after he was found guilty of stealing $12 billion from customers.
The fall of Bankman-Fried’s FTX cryptocurrency exchange will go down as one of the biggest financial fraud cases in history.
In a New York court, Judge Lewis Kaplan said the 32-year-old presented himself “a good guy” but it was all just “an act”.
The truth, the judge said, that while Bankman-Fried has apologised for the losses customers incurred, he never said a word of “remorse for his terrible crime”.
Federal prosecutors has pushed for a 40 – 50 years sentence. But even though that wasn’t achieved, Bankman-Fried won’t be out of jail until his late fifties.
However, Bankman-Fried’s lawyers said they would appeal his conviction.
Dressed in light brown prison garb in court, the one-time whiz kid said he had not made “selfish decisions,” but rather “bad decisions”.
At its height FTX, which allowed people to trade cryptocurrency like bitcoin, had one million users was worth almost $50 billion with up to $18 billion traded daily.
Celebrities like the NFL’s Tom Brady endorsed FTX and had naming rights to a sports stadium.
Never spotted wearing something as stuffy as a suit, he was seen as the geeky, quirky but essentially friendly face of cryptocurrency – the wild west of the finance world.
But late last year, Bankman-Fried, who was known to many as “SBF,” was found guilty following a five-week trial.
He was ordered to pay back $A16.88 billion ($US11 billion) – $12.3bn to customers, $2.61bn to investors and $2bn lenders.
Bankman-Fried: ‘I made bad decisions’
On Thursday, New York time, he was sentenced.
During the hearing Bankman-Fried told the courtroom that he was “sorry about what happened at every stage”.
He and the FTX team had “built something beautiful,” Bankman-Fried said.
“And I threw it all away”.
“I made a series of bad decisions, they weren’t selfish decisions, and they weren’t selfless decisions. They were bad decisions.”
Bankman-Fried’s lawyers depicted their client as a diligent young man motivated by philanthropy who got in over his head, calling the government’s proposed sentence “barbaric.”
Bankman-Fried’s defence team had asked for six years in prison, a sentence that would return him “promptly to a productive role in society,” said the legal team led by Marc Mukasey.
Judge: Bankman-Friend ‘knew he was wrong’
But Judge Kaplan was having none of it.
There was “never a word of remorse for the commission of a terrible crime,” he said, adding that there was a risk Bankman-Fried would commit crimes again.
The judge said the fraudster “presented himself as the good guy,” but it was just an “act”.
“He did it because he wanted to be a hugely, hugely political influential person in this country.
“He knew it was wrong, he knew it was criminal, he regrets that he made a very bad bet about the likelihood of being caught,” he continued, as Bankman-Fried stood in front of him with his hands clasped tightly at his waist.
“He did it because he wanted to be a hugely, hugely political influential person in this country”.
How FTX imploded
A graduate of the Massachusetts Institute of Technology and a billionaire before the age of 30, Bankman-Fried conquered the crypto world at breakneck speed, turning FTX, a small start-up he co-founded in 2019, into the world’s second largest exchange platform.
But in November 2022, the FTX empire imploded, unable to cope with massive withdrawal requests from customers panicked to learn that some of the funds stored at the company had been committed to risky operations at Bankman-Fried’s personal hedge fund, Alameda Research.
During the trial, some of Bankman-Fried’s closest associates said that he was key to all the decisions that saw $12.27bn billion vanish from FTX.
This group included Caroline Ellison, the former Alameda CEO and Bankman-Fried’s on-and-off-again girlfriend, who testified that Alameda had stolen “around $US14 billion ($A21.50bn)” from FTX clients and that Bankman-Fried “directed me to commit those crimes.”
Filings from the prosecution and defence offered starkly different takes on Bankman-Fried, the son of two well-regarded law professors at Stanford University.
“The lack of contrition is galling,” said US Attorney Damian Williams, who took issue with the image of Bankman-Fried as “selfless” and “altruistic,” as championed by the defence, noting he used funds for “luxury” real estate, donations to rub shoulders with political leaders, a Super Bowl television ad and “access to celebrities.”
The defence’s statement describes Bankman-Fried as “wracked” with remorse over the implosion of FTX.
Recovered funds
Bankman-Fried’s attorneys also pointed to statements from FTX’s current leaders expressing confidence that FTX customers and creditors would get back their money, saying in the brief that “the harm to customers, lenders and investors is zero”.
That argument drew a scathing response from FTX Trading Chief Executive John Ray, who said ongoing recoveries of ill-gotten gains do not make up for fraud.
“That things he stole … were successfully recovered through the efforts of a dedicated group” of professionals “does not mean the things were not stolen,” Mr Ray said in a letter to the court.
“What it means is that we got some of them back.”
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