NEW YORK − Sam Bankman-Fried was sentenced to 25 years in prison 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 accusing him of lying during his trial testimony. A jury found Bankman-Fried, 32, guilty 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.
"He knew it was wrong," Kaplan said before handing down the sentence. "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.
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. Bankman-Fried has vowed to appeal his conviction and sentence.
Kaplan said he had found that FTX customers lost $8 billion, FTX's equity investors lost $1.7 billion, and lenders to the Alameda Research hedge fund Bankman-Fried founded lost $1.3 billion.
"The defendant's assertion that FTX customers and creditors will be paid in full is misleading, it is logically flawed, it is speculative," Kaplan said. "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."
Is crypto real wealth?Black, Latino, LGBTQ investors see investments like bitcoin as 'a new path' to wealth and equity
The judge also said Bankman-Fried lied during his trial testimony when he said he did not know that his hedge fund had spent customer deposits taken from FTX.
Federal prosecutors had sought a sentence of 40 to 50 years. Bankman-Fried's lawyer, Marc Mukasey, had argued that a sentence of less than 5¼ years would be appropriate.
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 told the judge: "They put a lot of themselves into it, and I threw that all away. It haunts me every day."
Three of his former close associates testified as prosecution witnesses that he had directed them to use FTX customer money to plug losses at Alameda Research.
Nicolas Roos, a prosecutor with the U.S. attorney's office in Manhattan, told the judge: "The criminality here is massive in scale. It was pervasive in all aspects of the business."
During the hearing, Mukasey sought to distance his client from notorious fraudsters like Bernie Madoff.
"Sam was not a ruthless financial serial killer who set out every morning to hurt people," Mukasey said, describing his client as an "awkward math nerd" who worked hard 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 testified in his own defense that he made mistakes such as not implementing a risk management team, but he denied he intended to defraud anyone or steal customers' money.
He was led into the courtroom by members of the U.S. Marshals Service. His parents, Stanford University law professors Joseph Bankman and Barbara Fried, were there.
Timeline of events leading up to FTX founder Sam Bankman-Fried's conviction
▶ 2017: Bankman-Fried, a Massachusetts Institute of Technology graduate, quits his job as a quantitative trader at Jane Street Capital and launches Alameda Research, a trading firm focused on cryptocurrency.
▶ MAY 2019: Bankman-Fried and former Google employee Gary Wang found FTX as a new platform to trade crypto tokens and derivatives.
▶ OCTOBER 2021: FTX raises $420 million in venture funding, valuing the company at $25 billion. Bankman-Fried debuts on the Forbes billionaires list, which estimates his net worth at $22.5 billion. The magazine's assessment of his wealth would rise to $26 billion by the end of the year.
▶ FEBRUARY 2022: The NFL Super Bowl's broadcast is heavy on cryptocurrency advertisem*nts, signifying the height of the craze for the booming asset class. FTX's "Don't Miss Out" spot features actor Larry David, whose skepticism about the platform is portrayed as akin to an early human doubting the importance of the wheel.
▶ JUNE-JULY 2022: Bankman-Fried emerges as the cryptocurrency sector's so-called "white knight" amid a collapse in the prices of Bitcoin and other digital assets. Alameda gives crypto lender Voyager Digital a $200 million credit facility, and FTX gives lender BlockFi a $250 million loan.
▶ NOV. 2, 2022: Crypto news website CoinDesk publishes a leaked Alameda Research balance sheet showing that much of its $14.6 billion in assets is held in FTX's own token, called FTT. The token subsequently sheds around $400 million of its market cap, and rival exchange Binance says it will sell its FTT holdings.
▶ NOV. 11, 2022: FTX files for U.S. bankruptcy protection after a wave of customer withdrawals, and Bankman-Fried resigns as its chief executive officer.
▶ DEC. 12, 2022: Bankman-Fried is arrested in the Bahamas, where he lives and where FTX is based. The U.S. Attorney's office in Manhattan later confirms that a federal grand jury has indicted him for fraud and conspiracy charges.
▶ DEC. 21, 2022: Bankman-Fried leaves the Bahamas after agreeing to be extradited to the United States. While he is in the air, prosecutors reveal that Wang and Alameda chief executive Caroline Ellison have pleaded guilty and agreed to cooperate with prosecutors.
▶ DEC. 22, 2022: Bankman-Fried makes an initial appearance in Manhattan federal court and is released to home detention at his parents' home in Palo Alto, California, on $250 million bond.
▶ JAN. 3-12, 2023: Bankman-Fried pleads not guilty and U.S. District Judge Lewis Kaplan schedules his trial for October. In a post-arrest blog post, Bankman-Fried denies stealing funds and blames FTX's collapse on a broader downturn in crypto markets.
▶ AUG. 11, 2023: Kaplan revokes Bankman-Fried's bail after finding probable cause to believe he tampered with witnesses at least twice, including by sharing Ellison's private writings with a New York Times reporter. Bankman-Fried is remanded to Brooklyn's Metropolitan Detention Center pending trial.
▶ OCT. 3, 2023: Trial begins in Manhattan federal court.
▶ OCT. 28, 2023: Bankman-Fried testifies in his own defense, saying a "lot of people got hurt" when FTX collapsed but insisting he did not defraud anyone or steal billions of dollars from customers.
▶ NOV. 2, 2023: Bankman-Fried is convicted of all seven charges he faced.
▶ MARCH 28, 2024: Bankman-Fried is set to be sentenced for his fraud conviction.
