Fallen crypto mogul Sam Bankmanfried sentenced to 25 years in prison
NEW YORK >> Crypto entrepreneur Sam Bankman-fried was sentenced Thursday to 25 years in prison for a massive fraud on hundreds of thousands of customers that unraveled with the collapse of FTX, once one of the world’s most popular platforms for exchanging digital currency.
Though he described Bankman-fried as “extremely smart,” U.S. District Judge Lewis A. Kaplan delivered a blistering analysis of Bankman-fried and his crimes before announcing a sentence that was half of what prosecutors sought and less than a quarter of the 105 years recommended by the court’s probation officers.
“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 California man who seemed atop the cryptocurrency universe before his businesses collapsed in November 2022, leaving customers, investors and lenders short over $11 billion, which the judge ordered him to forfeit.
He was convicted in November of fraud and conspiracy — a dramatic fall from a crest of success that included a Super Bowl advertisement, testimony before Congress and celebrity endorsements from stars like quarterback Tom Brady, basketball point guard Stephen Curry and comedian
Larry David.
Kaplan imposed the sentence in the same Manhattan courtroom where, four months previously, Bankman-fried testified that he had intended to revolutionize the emerging cryptocurrency market with his innovative and altruistic ideas, not steal.
The judge said Bankman-fried repeatedly committed perjury on the witness stand in testimony that was “often evasive, hair-splitting, dodging questions.”
Kaplan said the sentence reflected the risk that Bankman-fried “will be in position to do something very bad in the future. And it’s not a trivial risk at all.” He added that the sentence was fashioned “for the purpose of disabling him to the extent that can appropriately be done for a significant period of time.”
Kaplan said he would advise the Federal Bureau of Prisons to send Bankman-fried to a medium-security prison near San Francisco because his notoriety, his association with vast wealth, his autism and social awkwardness are likely to make him especially vulnerable at a high-security facility.
Assistant U.S. Attorney Nicolas Roos had recommended a prison sentence of 40 to 50 years, saying it was the only way to ensure “the defendant doesn’t do it again.”
Prosecutors said tens of thousands of people and companies worldwide lost billions of dollars since 2017 when Bankman-fried looted FTX customer accounts that he promised were safe. They said he also sent fabricated documents to lenders, made tens of millions of illegal political donations and bribed Chinese officials.
The billions of dollars he stole were used to make risky investments, charitable donations, political donations to candidates of both major parties and to support a lavish lifestyle that included private jets and the purchase of expensive real estate in the Caribbean, prosecutors said.
Kaplan agreed with prosecutors Thursday that Bankman-fried should not be credited because some investors and customers might get some of their money back. He noted that customers lost about $8 billion, investors lost $1.7 billion and lenders were shorted by $1.3 billion.
When he spoke, Bankman-fried stood and apologized in a rambling statement: “A lot of people feel really let down. And they were very let down. And I’m sorry about that. I’m sorry about what happened at every stage.”
He added, “My useful life is probably over. It’s been over for a while now, from before my arrest.”
Wearing his khaki-colored prison uniform and chained at the ankles, Bankman-fried seemed to briefly get emotional as he spoke for about 20 minutes, expressing regret about “a lot of mistakes” but casting some blame onto others. His trademark messy and bushy hair had returned from the trimmer look he displayed at trial.
Kaplan later criticized those remarks, saying he expressed “never a word of remorse for the commission of terrible crimes.”
As his misty-eyed client looked on, defense attorney Marc Mukasey said the portrayal of the Massachusetts Institute of Technology graduate as an “arrogant greedy swindler who thought he would get away with fleecing the hard-earned money of hard-working people” was wrong.
“Sam was not a ruthless financial serial killer who set out every morning to hurt people,” Mukasey told Kaplan in court after urging in court papers that any prison sentence be in the single digits. “Sam Bankman-fried doesn’t make decisions with malice in his heart. He makes decisions with math in his head.”
The judge later criticized Bankman-fried’s calculations, saying he was indeed “a math nerd, who looked at decisions in terms of math, expected value.”
He cited trial testimony in which Bankman-fried’s former girlfriend and fellow executive Caroline Ellison said Bankman-fried once told her that his willingness to embrace risk was such that he’d be happy to flip a coin if it came up tails and the world was destroyed — as long as if it came up heads, the world would be twice as good.
The judge said Bankman-fried utilized that risk-taking nature at his companies, “betting on expected value” and weighing the risk of getting caught with the probability of large gains.
“That was the game,” Kaplan said. “It’s his nature.”
Bankman-fried’s attorneys, friends and family had urged leniency, saying he was unlikely to re-offend again. They also said FTX’S investors have largely recovered their funds — a claim disputed by bankruptcy lawyers, FTX and its creditors.