Sam Bankman-Fried, the founder of cryptocurrency exchange FTX convicted of stealing billions of dollars from customers, was sentenced to 25 years in prison on Thursday, capping an extraordinary saga that has rocked the crypto industry and become a cautionary tale of greed and hubris.
Mr. Bankman-Fried’s sentence was less than the 40 to 50 years federal prosecutors had sought after a jury found him guilty of fraud, conspiracy and money laundering — charges that carried a maximum sentence of 110 years behind bars . But the sentence was much longer than the six and a half years that his defense lawyers had asked for.
Mr. Bankman-Fried, 32, did not visibly react as Judge Lewis A. Kaplan handed down the sentence in Federal District Court in Manhattan. His parents, law professors Joe Bankman and Barbara Fried, sat two rows from the front, staring at the floor.
“He knew it was wrong. He knew it was criminal,” Judge Kaplan said of Mr Bankman-Fried’s actions.
Before the sentence was handed down, Mr Bankman-Fried, scrubbed clean and wearing a loose brown prison uniform, apologized to FTX customers, investors and employees.
“A lot of people feel really let down and have been very let down,” he said. “I regret it. I regret what happened at every stage.” He added that his decisions “haunt” him every day.
Mr. Bankman-Fried was also ordered to forfeit about $11 billion in assets.
In sentencing, Judge Kaplan pointed to testimony from Mr. Bankman-Fried’s trial that showed the FTX founder’s extraordinary appetite for risk, saying it was in his “nature” to make colossally risky bets. “There is a risk that this man may be able to do something very bad in the future,” he said.
Judge Kaplan also said Mr Bankman-Fried had lied on the witness stand and failed to take responsibility for his crimes. “It’s unfortunate that he made a very bad bet on the possibility of being caught,” he said. “But he’s not going to admit anything.”
Mr. Bankman-Fried, currently housed at the Metropolitan Detention Center in Brooklyn, will be sent to a low- or medium-security prison, the judge said, most likely near his parents’ home in the San Francisco Bay Area.
The conviction marked the finale of a sweeping fraud case that exposed rampant volatility and risk-taking throughout the loosely regulated world of cryptocurrencies. In November 2022, FTX collapsed almost overnight, wiping out $8 billion in customer savings. At trial last fall, he was convicted of seven counts of fraud, conspiracy and money laundering.
His sentence ranks as one of the longest imposed on a white-collar defendant in recent years. Bernie Madoff, who orchestrated a notorious Ponzi scheme exposed during the 2008 financial crisis, was sentenced to 150 years in prison in 2009. He was 70 and died 12 years later. Elizabeth Holmes, who was convicted of defrauding investors in her blood-testing start-up Theranos, has been sentenced to 11 years and three months in 2022.
A spokesman for Mr. Bankman-Fried declined to comment. In a statement, his parents said: “We are devastated and will continue to fight for our son.”
Ira Lee Sorkin, the defense lawyer who represented Mr. Madoff, said he was not surprised that Mr. Bankman-Fried received a stiff sentence, albeit a shorter one than his client.
“He’s 32 years old and he’s going to see the light of day,” she said of Mr. Bankman-Fried. “But he’s going to spend a lot of time in a cell.”
Just 18 months ago, Mr Bankman-Fried was a corporate titan and one of the youngest billionaires on the planet. With his face plastered on billboards and magazine covers, he could raise money seemingly at will. He dabbled with actors, musicians and superstar athletes, cultivating the image of a nerd who intended to donate his entire fortune to charity.
Based in the Bahamas, FTX was one of the largest marketplaces for cryptocurrencies — an easy-to-use platform where investors could exchange dollars or euros for digital currencies like Bitcoin and Ether. Its valuation was at 30 billion dollars.
However, in less than a week in November 2022, filings revealed an $8 billion hole in FTX’s accounts. Mr. Bankman-Fried resigned, handing over power to a team of lawyers who promptly filed for bankruptcy. The following month, he was arrested at his luxury apartment in the Bahamas and charged with stealing from clients to fund billions in political contributions, charitable donations and investments in other startups.
The investigation moved with surprising speed for such a complex case. Within months, three of Mr. Bankman-Fried’s top deputies, including a former girlfriend, pleaded guilty to fraud and agreed to cooperate with prosecutors. Mr. Bankman-Fried was initially placed under house arrest, but a judge revoked his bail in August after ruling he had tried to intimidate witnesses and sent him to the Brooklyn Detention Center.
At the trial in October, former colleagues of Mr. Bankman-Fried testified for the prosecution, telling jurors that they had conspired with him to raid client accounts. When he took the witness stand, Mr Bankman-Fried appeared evasive at times, repeatedly claiming he could not remember crucial details of his time at FTX.
“When he wasn’t outright lying, he was often evasive, cutting hair, avoiding questions,” Judge Kaplan said Thursday. “I have never seen such a show.”
After he was convicted, Mr. Bankman-Fried’s lawyers and family launched a major campaign to secure a lenient sentence and rewrite the public narrative of FTX’s failure. In a sentencing brief, Marc Mukasey, one of the defense lawyers, argued that Mr. Bankman-Fried had sometimes acted strangely on the stand because he was autistic. He also mentioned the tycoon’s philanthropic initiatives, arguing that FTX was supposed to be a force for good in the world.
But the defense case focused on the money FTX users lost when the exchange went under. Since FTX’s bankruptcy, its new leaders have raised billions of dollars to return to customers, in part by liquidating stashed digital currency and selling Mr. Bankman-Fried’s stakes to other companies. Mr. Mukasey argued that those customers would eventually be liquidated through the bankruptcy process, putting the damages caused by Mr. Bankman-Fried’s actions at “zero.”
Prosecutors rejected that argument. While FTX’s new leadership has predicted that customers will eventually get their deposits back, the money they’ll receive will be equivalent to the dollar value of their holdings in November 2022 — and won’t represent a recent surge in crypto markets which sent Bitcoin to its highest price.
Mr. Bankman-Fried “displayed a brazen disregard for the rule of law,” prosecutors wrote in a sentencing memo. “He knew what society considered illegal and immoral, but he ignored what was based on a destructive megalomania.”
On Thursday, Judge Kaplan said of the FTX victims: “The defendant’s assurance that they will be paid in full is misleading. It’s probably flawed. It’s for-profit.”
In recent weeks, prosecutors filed hundreds of letters from FTX customers describing how the financial losses had ruined their lives. One client said the breakdown had led to “suicidal thoughts”.
“Sam Bankman-Fried must spend the rest of his life thinking about the number of lives he ruined with his selfishness and frivolity,” the customer wrote. “I really hope justice teaches him the difference between life and video games.”
Another FTX user, Sunil Kavuri, who lost $2 million when the company collapsed, testified at the hearing that the explosion had wiped out money he had planned to spend on a house and his children’s education.
“I lived the FTX nightmare for almost two years,” he said.
When Mr. Bankman-Fried spoke, he offered sometimes muddled thoughts, apologizing for his mistakes while insisting that FTX had enough assets to make clients whole.
“I made a series of bad decisions,” he said, his leg shaking. “They were not selfish decisions. They were not selfless decisions. They were bad decisions.”
Mr. Bankman-Fried has vowed to appeal his conviction, hiring a lawyer from the law firm Shapiro Arato Bach to oversee that effort. But in his remarks, he appeared to accept that he would be in prison for some time.
“At the end of the day, my useful life is probably over now,” he said.
Matthew Goldstein contributed to the report.
