Sam Bankman-Fried was sentenced to 25 years in prison by a judge on Thursday for stealing $8 billion from customers of the now-bankrupt FTX cryptocurrency exchange he founded, the last step in the former billionaire wunderkind's dramatic downfall.
U.S. District Judge Lewis Kaplan handed down the sentence at
a Manhattan court hearing after rejecting Bankman-Fried's claim that FTX
customers did not actually lose money and finding that he lied during his trial
testimony. A jury found Bankman-Fried, 32, guilty on Nov. 2 on seven fraud and
conspiracy counts stemming from FTX's 2022 collapse in what prosecutors have
called one of the biggest financial frauds in U.S. history.
Kaplan said Bankman-Fried has shown no remorse.
"He knew it was wrong," Kaplan said. "He knew
it was criminal. He regrets that he made a very bad bet about the likelihood of
getting caught. But he is not going to admit a thing, as is his right."
Bankman-Fried, wearing a beige short-sleeve jail T-shirt,
acknowledged during 20 minutes of remarks to the judge that FTX customers had
suffered and he offered an apology to his former FTX colleagues - but did not
admit criminal wrongdoing.
He has vowed to appeal his conviction and sentence.
Bankman-Fried stood with his hands clasped before him as
Kaplan read the sentence. He then spoke with his defense lawyer Marc Mukasey
briefly before being led out of the courtroom by members of the U.S. Marshals
Service.
The sentence marked the culmination of Bankman-Fried's
plunge from an ultra-wealthy entrepreneur and major political donor to the
biggest trophy to date in a crackdown by U.S. authorities on malfeasance in
cryptocurrency markets.
"There are serious consequences for defrauding
customers and investors," U.S. Attorney General Merrick Garland said in a
statement. "Anyone who believes they can hide their financial crimes
behind wealth and power, or behind a shiny new thing they claim no one else is
smart enough to understand, should think twice."
Kaplan found that FTX customers lost $8 billion, FTX's
equity investors lost $1.7 billion, and that lenders to the Alameda Research
hedge fund Bankman-Fried founded lost $1.3 billion. He imposed an $11 billion
forfeiture order and authorized the government to repay victims with seized
assets.
Federal prosecutors had sought a sentence of 40 to 50 years.
Mukasey had argued for a sentence of less than 5-1/4 years.
'I'M SORRY FOR THAT'
Addressing the judge, Bankman-Fried said, "Customers
have been suffering ... I didn't at all mean to minimize that. I also think
that's something that was missing from what I've said over the course of this
process, and I'm sorry for that."
Referring to his FTX colleagues, Bankman-Fried added,
"They put a lot of themselves into it, and I threw that all away. It
haunts me every day."
Three former close associates testified as prosecution
witnesses that Bankman-Fried had directed them to use FTX customer funds to
plug losses at Alameda Research. All three have pleaded guilty to fraud.
Kaplan said Bankman-Fried lied when testified that he did
not know Alameda Research had spent customer deposits taken from FTX.
Mukasey sought to distance Bankman-Fried from notorious
fraudsters like Bernie Madoff, saying he was "not a ruthless financial
serial killer" but rather an "awkward math nerd" who tried to
get customers their money back after FTX's collapse.
"Sam Bankman-Fried doesn't make decisions with malice
in his heart," Mukasey added. "He makes decisions with math in his
head."
Bankman-Fried's eyes turned red as he appeared to hold back
tears while Mukasey spoke.
His parents, Stanford University law professors Joseph
Bankman and Barbara Fried, attended the sentencing. Bankman held a green
umbrella as they exited the courthouse into a rainy New York afternoon, their
arms around each other.
"We are heartbroken and will continue to fight for our
son," they said in a statement.
'POWER AND INFLUENCE'
A Massachusetts Institute of Technology graduate,
Bankman-Fried rode a boom in the values of bitcoin and other digital assets to
a net worth of $26 billion, according to Forbes magazine, before he turned 30.
Bankman-Fried became known for his mop of unkempt curly hair
and commitment to a movement called effective altruism, which encourages
talented young people to focus on earning money and giving it away to worthy
causes.
He was one of the biggest contributors to Democratic
candidates and causes before the 2022 U.S. midterm elections. Kaplan pointed to
trial evidence showing Bankman-Fried also donated to Republicans through
"straw" donors to hide his involvement.
The judge called Bankman-Fried's efforts to present himself
as a "good guy" an act, adding, "The goal was power and
influence."
Bankman-Fried has been detained at the Metropolitan
Detention Center in Brooklyn since August 2023, when Kaplan revoked his bail
after finding he likely tampered with witnesses at least twice. Kaplan said he
would recommend Bankman-Fried be sent to a prison close to San Francisco.
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