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Sam Bankman-Fried sentenced to 25 years in prison

The former crypto mogul said his useful life is "probably over" as he received the sentence.

Sam Bankman-Fried at a courtroom as he receives his sentence from Judge Lewis Kaplan.

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Almost two years after the collapse of FTX, Sam Bankman-Fried (SBF), founder and former chief of the defunct exchange, has been sentenced to 25 years in federal prison for his involvement in one of the biggest financial fraud cases in American history.

The sentence was handed down by Judge Lewis Kaplan of the Southern District of New York at the Manhattan federal court earlier today. The decision was weighed based on recommendations from the prosecution as well as guidance from the Probation Department.

Judge Kaplan also ordered a forfeiture of $11.02 billion and recommended medium-security for SBF’s federal prison term.

SBF’s parents, Joe Bankman and Barbara Fried, both tenured Stanford law professors, were present at the sentencing. SBF arrived in court and went inside without shackles, although he gestured with his hands behind his back as he walked in twelve minutes late.

Judge Kaplan rejected the defense’s previous claims that there was no actual loss to victims, saying that SBF’s assertion “that FTX customers and creditors will be paid in full” was “misleading, [it is] logically flawed, [it is] speculative.”

The loss amount to Bankman-Fried’s criminal conduct is estimated to exceed $550 million, which is the high end of a range based on federal sentencing guidelines.

Kaplan also noted that he found losses of $1.7 billion to investors, $1.3 billion to Alameda Research lenders, and $8 billion to FTX customers.

According to Kaplan,  Bankman-Fried committed witness tampering prior to being remanded into custody. At the time, Bankman-Fried initiated communication with Ryne Miller, the former FTX general counsel. The judge also found that Bankman-Fried committed perjury over the course of his trial testimony by falsely testifying that he didn’t know Alameda spent FTX customer deposits before the fall of 2022.

Marc Mukasey, Bankman-Fried’s defense attorney, countered that his client was “not a ruthless financial killer,” adding that his motivations were “misapprehended and misunderstood.” SBF’s mother noted in a pre-sentencing letter that her son had helped two inmates who were facing lifetime imprisonment find counsel.

“I am sorry about what happened at every stage. And there are things I should’ve done and things I shouldn’t have,” Bankman-Fried said as he addressed the court after his lawyer spoke.

After Bankman-Fried’s statements, prosecutor Nicolas Roos offered a counter-argument.

“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. It was not a bloodless financial loss on paper,” Roos said.

From primetime to prison

SBF was convicted on November 2, 2023, with seven counts of fraud and conspiracy for his involvement in the collapse of FTX, a crypto exchange that was once valued at over $32 billion.

Bankman had considered coming out as Republican, with reports stretching back to 2022 indicating that he had considered funneling as much as $1 billion to support undisclosed candidates for the U.S. elections. More recently, the disgraced crypto mogul used jail time to promote Solana. As photos of SBF in jail surfaced, a former inmate described him as “more gangster” than a famous rapper who was also jailed.

Prosecutors have argued for a sentence between 40 and 50 years, while Bankman-Fried’s defense argued for no more than six and a half years, which they deemed appropriate for a nonviolent, first-time offense. These arguments were filed in a 116-page sentencing memo sent earlier this month, which argued that Bankman-Fried’s  sentence should be “commensurate with the extraordinary dimensions of his crimes.”

Due to the scope of the fraud, SBF initially faced up to 110 years in prison.

Customer outcome

The sentencing in what has been one of the biggest financial frauds in US history was widely anticipated. In a letter to the Department of Justice this week, a customer who lost $4 million when FTX filed for bankruptcy in 2022 said his life was destroyed by the exchange’s collapse. Sam SBF’s month-long trial last year exposed similar stories of financial ruin caused by the FTX debacle.

FTX’s bankruptcy affects an estimated 100,000 to over 1,000,000 creditors and investors, including a substantial number of investors ranging from retail traders to major crypto hedge funds impacted by the collapse.

Major crypto lenders like Gemini and BlockFi declared bankruptcy due to their connections to the exchange and the wider market turmoil while established exchanges like Coinbase and Binance were forced to lay off staff in an effort to deal with the setback.

Now that the case has concluded, the focus has shifted to repaying customers who suffered losses in the FTX saga.

A recent court hearing in Delaware sheds light on FTX’s plan. According to FTX attorney Andrew Dietderich, the exchange prioritizes liquidating assets to fully repay customers. They’ve reportedly recovered over $7 billion and reached agreements with regulators to ensure these funds go towards customer compensation.

Adding to the recovery efforts, FTX recently struck a deal to transfer two-thirds of its shares in Anthropic, an AI company, for $884 million.

However, many FTX customers believe the new leadership team at FTX is significantly undervaluing their lost crypto holdings. CNBC reported that customers were worried that they might not receive the full value of their original investments.

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