Bankman-Fried learns his fate

FTX fraudster Sam Bankman-Fried sentenced to 25 years in prison

SBF had asked for sentence of just 5 or 6 years. Prosecutors sought 40 to 50.

Jon Brodkin – Mar 28, 2024 11:54 am | 458

FTX Founder Sam Bankman-Fried arrives at US District Court on March 30, 2023, in New York City after being hit with a criminal charge for allegedly authorizing a bribe of at least $40 million to one or more Chinese government officials. Credit: Getty Images | Michael Santiago

Convicted FTX fraudster Sam Bankman-Fried was sentenced to 25 years in prison today, according to news reports.

The founder and ex-CEO of cryptocurrency exchange FTX was sentenced this morning by Judge Lewis Kaplan in US District Court for the Southern District of New York. Bankman-Fried had requested a sentence of 63 to 78 months (5.25 to 6.5 years), arguing that he deserved leniency because of his “charitable works and demonstrated commitment to others.”

Kaplan ordered a forfeiture of $11 billion but did not order restitution “due to the complexity of the case and the number of victims,” the court docket said. Kaplan instead authorized the US to compensate victims with “forfeited assets through a remission process, as restitution would be impractical in this case.”

Kaplan said today that Bankman-Fried committed perjury during the trial when he claimed to have no knowledge that Alameda spent FTX customer deposits before the fall of 2022, according to CNN. Kaplan also said that Bankman-Fried committed witness tampering before he was taken into custody when he communicated with the former FTX general counsel.

Kaplan said there is a risk “that this man will be in a position to do something very bad in the future, and it’s not a trivial risk.” Bankman-Fried did not show remorse even though “he knew it was wrong,” Kaplan said.

“Kaplan also said he had found 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, rejecting Bankman-Fried’s argument that customers would be paid back in full through the bankruptcy process,” according to Reuters.

“The defendant’s assertion that FTX customers and creditors will be paid in full is misleading, it is logically flawed, it is speculative,” Kaplan was quoted as saying. “A thief who takes his loot to Las Vegas and successfully bets the stolen money is not entitled to a discount on the sentence by using his Las Vegas winnings to pay back what he stole.”

Kaplan recommended that Bankman-Fried be sent to a medium-security prison because his “notoriety, his association with vast wealth, his autism and social awkwardness are likely to make him more than usually vulnerable in the environment of a high-security facility.”

SBF admits “series of bad decisions”

As The Washington Post reported, Bankman-Fried attorney Marc Mukasey said during today’s hearing that “Sam was not a ruthless financial serial killer who set out every morning to hurt people. Sam Bankman-Fried doesn’t make decisions with malice in his heart. He makes decisions with math in his head.”

Bankman-Fried addressed the court after his lawyer spoke. “I am sorry about what happened at every stage, and there are things I should’ve done and things I shouldn’t have,” he said, according to CNN. Bankman-Fried said he made “a series of bad decisions.”

The defendant claimed that he and his partners “built something beautiful” at FTX, “and I threw it all away.” FTX’s downfall “haunts me every day,” he was quoted as saying.

Bankman-Fried seemed to acknowledge that he was about to receive a long sentence, saying “my useful life is probably over” and has “been over for a while now.”

After Bankman-Fried’s statement, prosecutor Nicolas Roos told the judge that “Sam Bankman-Fried stole over $8 billion in customer money, and I emphasize stole because it was not a liquidity crisis, or an active mismanagement, or poor oversight from the top.”

Statutory maximum was 110 years

Bankman-Fried was convicted on seven charges with a combined maximum sentence of 110 years. The charges included wire fraud and conspiracy to commit wire fraud, securities fraud, commodities fraud, and money laundering.

A 100-year sentence was recommended in a presentence investigation report prepared by a probation officer, but US prosecutors asked the judge to put Bankman-Fried behind bars for 40 to 50 years. The US filing said Kaplan should “impose a sentence that underscores the remarkably serious nature of the harm to thousands of victims; prevents the defendant from ever again committing fraud; and sends a powerful signal to others who might be tempted to engage in financial misconduct that the consequences will be severe.”

“A sentence of 40 to 50 years is necessary to serve such purposes,” the US filing said. A 100-year term would effectively be a life sentence and “is not necessary,” the US said.

“There is a significant likelihood that if the defendant is released back into society at a young enough age he will have the opportunity to engage in another fraud,” prosecutors wrote, adding that Bankman-Fried “has already proven adept at crafting a self-serving public image, and his sentencing submission itself shows that he is already attempting to reframe his crimes as mere mistakes or misunderstandings.”

Prosecutors disputed Bankman-Fried’s claim that he wasn’t motivated by greed, saying he “engaged in a myriad of fraudulent conduct to maximize his business’s earnings and his own wealth.” Bankman-Fried’s attempt to downplay the losses to victims “are entirely meritless and fail to address the facts of this case or the governing law,” the US sentencing recommendation said.

“Whether or not the exchange could have operated as a ‘legitimate’ business, the fact is that the defendant intentionally used its infrastructure to misappropriate billions of dollars, and that customer deposits were not safely custodied for them from the outset,” the filing said.

Bankman-Fried’s charitable giving “was charity with other people’s money,” the US said.

Listing image: Getty Images | Michael Santiago

Jon Brodkin Senior IT Reporter

Jon is a Senior IT Reporter for Ars Technica. He covers the telecom industry, Federal Communications Commission rulemakings, broadband consumer affairs, court cases, and government regulation of the tech industry.

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