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FTX founder Sam Bankman-Fried sentenced to 25 years in prison for crypto fraud and ordered to pay $11 billion in forfeiture

FTX founder Sam Bankman-Fried was sentenced Thursday to 25 years in prison for massive fraud and conspiracy that doomed his cryptocurrency exchange and an associated hedge fund, Alameda Research.

The sentence handed down in Manhattan federal court was significantly less than the 40 to 50 years in prison that federal prosecutors wanted for Bankman-Fried, but it was much higher than the five to six and a half years her lawyers suggested.

“There is a risk that this man will be in a position to do something very bad in the future,” Judge Lewis Kaplan said before sentencing the 32-year-old and ordering him to pay $11 billion for forfeiture to the United States government.

FTX Founder Sam Bankman-Fried Sentenced to 25 Years in Prison for Massive Crypto Fraud

“And that’s not a trivial risk at all,” Kaplan added.

Kaplan stressed that he never heard “a word of remorse for the commission of terrible crimes” from Bankman-Fried.

The judge said that in his 30 years on the federal bench, he had “never seen a performance” like Bankman-Fried’s testimony at trial.

While Bankman-Fried did not “outright lie” during cross-examination by prosecutors, he was “evasive,” Kaplan said.

In this courtroom sketch, cryptocurrency exchange FTX founder Sam Bankman-Fried stands before U.S. District Judge Lewis Kaplan as he is sentenced to 25 years in prison, before a federal court in New York on March 28, 2024.

Jane Rosenberg | Reuters

“There is absolutely no doubt that Mr Bankman-Fried’s name is currently in the mud around the world,” the judge said.

Trial jurors also did not believe Bankman-Fried’s version of events, finding him guilty in November on seven counts and holding him responsible for the loss of about $10 billion in money of customers as a result of the securities fraud conspiracy.

Prosecutors said Bankman-Fried led a conspiracy to plunder clients’ money to make investments, fund political donations to Democrats and Republicans and for his personal use, as well as to repay loans taken out by Alameda Research .

Before being sentenced, Bankman-Fried spoke with contrition while suggesting that the billions of dollars lost by customers were the result of a “liquidity crisis” or “mismanagement”, not ‘fraud.

“A lot of people feel really disappointed. And they were very disappointed,” he said. “And I’m sorry for that. I’m sorry for what happened every step of the way.”

FTX founder Sam Bankman-Fried leaves the US courthouse in New York on July 26, 2023.

Amr Alfiki | Reuters

“My useful life is probably over,” he said, wearing a beige prison jumpsuit. “It’s been over for a while now, before my arrest.”

“They built something really magnificent and I threw all that away,” he said of his colleagues at FTX, a company once valued at $32 billion. “It haunts me every day.”

“It’s been excruciating to watch all this unfold,” he told Kaplan. “Customers don’t deserve this level of pain.”

“I was the CEO of FTX and I was responsible for it.”

But even if he took some responsibility, Bankman-Fried suggested that customers would eventually get back the money they placed with his exchange, and blamed a federal bankruptcy court for not yet restoring those customers .

Kaplan seemed to stop paying close attention at this point.

In response, Bankman-Fried crossed his arms and began tapping his right foot rapidly while continuing to speak.

In this courtroom sketch, cryptocurrency exchange FTX founder Sam Bankman-Fried sits between his defense attorneys Marc Mukasey and Torrey Young during his sentencing hearing before the federal court in New York on March 28, 2024.

Jane Rosenberg | Reuters

Deputy Prosecutor Nicolas Roos, arguing for a prison sentence of up to five decades, scoffed at the picture painted by Bankman-Fried and his lawyers.

FTX’s collapse in late 2022 was not due to “a liquidity crisis or an act of mismanagement,” Roos said. “This is the theft” of billions of dollars of money from clients around the world, the prosecutor said. “It’s a loss that has really affected people.”

Bankman-Fried’s lawyer, Marc Mukasey, in asking Kaplan for leniency, focused on his client’s psychological problems, noting that his mother said Bankman-Fried had “a terrible sadness deep inside” , who was “a constant presence in his life”.

Mukasey noted that Bankman-Fried once wrote in his diary that he “feels neither pleasure nor happiness.”

“Sam was not a ruthless financial serial killer who set out every morning to harm people,” the attorney said.

Instead, “he’s a clumsy math nerd” with a “tireless work ethic,” said the lawyer, who also compared the FTX founder to “a beautiful puzzle.”

Bankman-Fried should not be in a “four by four iron box,” Mukasey argued.

In this courtroom sketch, FTX founder Sam Bankman-Fried attends his sentencing hearing in New York federal court on March 28, 2024.

Jane Rosenberg | Reuters

Before sentencing Bankman-Fried, Kaplan said he rejected the defendant’s “entire argument that there were no losses” at FTX, calling the assertion “misleading, logically flawed and speculative.

Sunil Kavuri, a victim of Bankman-Fried, then spoke about the damage he caused.

Bankman-Fried looked at Kavuri as he described his discussions with thousands of other FTX fraud victims, a number of whom suffer from depression and take prescription medications to cope with the trauma of their losses.

“I suffered every day for the last two years,” Kavuri said. “I continue to suffer.”

Manhattan U.S. Attorney Damian Williams, in a statement after the sentencing, said, “Samuel Bankman-Fried orchestrated one of the greatest financial frauds in history.”

“His deliberate and ongoing lies demonstrate a blatant disregard for his clients’ expectations and a lack of respect for the rule of law, all so that he can secretly use his clients’ money to expand his own power and influence. influence,” Williams said.

Attorney General Merrick Garland said: “Anyone who thinks they can hide their financial crimes behind wealth and power, or behind some shiny new thing that they claim no one else is smart enough to understand, should think twice. times. »

Bankman-Fried’s family, in a statement, said: “We are heartbroken and will continue to fight for our son.” Joseph Bankman and Barbara Fried, Stanford law professors, sat in the front row of the courtroom gallery during the sentencing.

Barbara Fried and Allan Joseph Bankman, parents of FTX co-founder Sam Bankman-Fried, arrive in court in New York on March 28, 2024.

Yuki Iwamura | Bloomberg | Getty Images

Bankman-Fried plans to appeal his conviction and sentence.

Three other people, all of whom testified against Bankman-Fried at trial, are awaiting their own sentencing after pleading guilty to criminal charges related to FTX and Alameda Research.

They are Caroline Ellison, the Alameda CEO who dated Bankman-Fried, FTX engineering chief Nishad Singh, and Gary Wang, FTX’s co-founder and chief technology officer.

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