Fallen crypto mogul Sam Bankman-Fried sentenced to 25 years in prison

NEW YORK (AP) — 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 his 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 after Bankman-Fried looted FTX customer accounts that he promised were safe to make millions of dollars of illegal political donations, bribe Chinese officials, make risky investments, buy luxury real estate in the Caribbean and live lavishly.

Kaplan agreed with prosecutors Thursday that Bankman-Fried should not be credited because some investors and customers might recover some money. 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.

He praised some of his former executives and workmates, saying: “They threw themselves into it and then I threw all of that away. It haunts me every day.”

Kaplan later criticized Bankman-Fried’s 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 said 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. They also said FTX’s investors have largely recovered their funds — a claim disputed by bankruptcy lawyers, FTX and its creditors.

“Mr. Bankman-Fried continues to live a life of delusion,” wrote John Ray, the CEO of FTX who has been cleaning up the bankrupt company. “The ‘business’ he left on November 11, 2022 was neither solvent nor safe.”

One FTX customer, Sunil Kavuri, spoke at sentencing, saying he’d traveled from London on behalf of over 200 victims who had sent impact statements to the judge.

He said he’d spoken to other “victims just like myself who had their dreams destroyed” and had lived “the FTX nightmare every day for almost two years, every day, every night, a lot of crying, sleepless nights.”

Bankman-Fried’s parents, both Stanford Law School professors, did not speak as they left the courthouse Thursday, but later issued a statement: “We are heartbroken and will continue to fight for our son.”

Bankman-Fried, of Palo Alto, California, was once worth billions of dollars on paper as the co-founder and CEO of FTX, which was the second-largest cryptocurrency exchange in the world at one time.

FTX let investors buy dozens of virtual currencies, from Bitcoin to more obscure ones like Shiba Inu Coin. Flush with billions of dollars of investors’ cash, Bankman-Fried took out a Super Bowl advertisement to promote his business and bought the naming rights to an arena in Miami.

But the collapse of cryptocurrency prices in 2022 took its toll on FTX, ultimately leading to its downfall. FTX’s hedge fund affiliate, Alameda Research, had bought billions of dollars of various crypto investments that lost considerable amounts of value in 2022. Bankman-Fried tried to plug the holes in Alameda’s balance sheet with FTX customer funds.

Three people from Bankman-Fried’s inner circle pleaded guilty to related crimes and testified at his trial.

Besides Ellison, two onetime friends of Bankman-Fried — Gary Wang and Nishad Singh — testified they felt they were directed by Bankman-Fried to commit fraud.