FTX founder, Sam Bankman Freed, sentenced to 25 years in prison

NEW YORK (AP) — Cryptocurrency entrepreneur Sam Bankman Fried He was sentenced Thursday to 25 years in prison for a massive fraud on hundreds of thousands of customers that collapsed with the collapse of FTX, once one of the world's most popular platforms for cryptocurrency exchanges.

Although Bankman called Fried “extremely intelligent,” U.S. District Judge Louis A. Kaplan offered a scathing analysis of Bankman-Fried and his crimes before announcing a sentence that represented half of what prosecutors sought and less than a quarter of the 105 years recommended by the court's probation officers.

“There's absolutely no doubt that Mr. Bankman-Fried's name right now is pretty much mud all over the world,” Kaplan said of the 32-year-old Californian who seemed on top of the cryptocurrency world before his business collapsed in November 2022. Customers, investors and lenders are short more than $11 billion, which a judge ordered forfeited.

He was He was convicted in November Of fraud and conspiracy — a dramatic fall from the pinnacle of success that included a Super Bowl ad, 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 earlier, Bankman-Fried testified that he intended to revolutionize the emerging cryptocurrency market with his innovative and altruistic ideas, not theft.

The judge said Bankman-Fried repeatedly committed perjury before the witness stand in his testimony, which was “often evasive, confusing and evading questions.”

Kaplan said the ruling reflects the risk that Bankman-Fried “will be in a position to do something very bad in the future.” “It is not a trivial risk at all.” He added that the sentence was drafted “for the purpose of disabling it to the extent that it can be done appropriately for a long period of time.”

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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, connection to vast fortunes, and his autism and social awkwardness would likely make him particularly vulnerable in high-risk circumstances. Security facility.

It was recommended by Assistant U.S. Attorney Nicholas Ross Imprisonment 40 to 50 years, saying it was the only way to guarantee that “the defendant would never do it again.”

Prosecutors said tens of thousands of people and businesses around the world have lost billions of dollars since 2017 when Bankman-Fried ransacked FTX customer accounts that it promised were safe. They said he also sent fabricated documents to lenders, made tens of millions in illegal political donations, and bribed Chinese officials.

Prosecutors said the billions of dollars he stole were used in risky investments, charitable donations, political donations to candidates of both major parties, and to support a lavish lifestyle that included private jets and the purchase of expensive real estate in the Caribbean.

Kaplan agreed with prosecutors Thursday that Bankman Fried should not be credited because some investors and clients might get some of their money back. He pointed out that customers lost about $8 billion, investors lost $1.7 billion, and lenders were exposed to short selling of $1.3 billion.

When he spoke, Bankman-Fried stood up and apologized in a rambling statement: “A lot of people are feeling really let down. They've been very let down. And I'm sorry for that. I'm sorry for what happened at every stage.”

He added: “My useful life may be over.” “It ended a while ago, before I was arrested.”

Bankman-Fried, wearing a khaki prison uniform and shackled at the ankles, appeared briefly emotional as he spoke for about 20 minutes, expressing regret about “a lot of mistakes” but shifting some of the blame to others. His messy, thick hair was back from the rambunctious look he had shown at the trial.

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Kaplan later criticized those statements, saying that he had never expressed remorse for committing heinous crimes.

While his client's eyes were misty, defense attorney Mark Mukasey said portraying the MIT graduate as a “greedy, arrogant fraudster who thinks he'll get away with grabbing the hard-earned money of hard-working people” was wrong. .

“Sam was not a ruthless serial financial killer who would set out every morning to hurt people,” Mukasey told Kaplan in court after urging in court papers that the 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 “obsessed with mathematics, looking at decisions in terms of mathematics and expected value.”

He cited trial testimony in which Carolyn Ellison, Bankman-Fried's former friend and fellow executive, said that Bankman-Fried once told her that his willingness to take risk was such that he would be happy to flip a coin if it came up tails and the world was like that. It was destroyed – since if it had appeared over the heads, the world would have been twice as better.

The judge said Bankman-Fried used this risk-taking nature in his companies, “betting on expected value” and balancing the risk of falling short with the potential for big gains.

“That was the game,” Kaplan said. “It's his nature.”

Bankman Fried's attorney, friends and family He urged leniencySaying he was unlikely to commit the crime again. They also said FTX investors largely got their money back — a claim disputed by bankruptcy lawyers for FTX and its creditors.

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

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

Bankman-Fried 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 allows investors to purchase dozens of virtual currencies, from Bitcoin to more obscure currencies like Shiba Inu Coin. With billions of dollars in investor money pouring in, Bankman Fried ran a Super Bowl ad to promote his company and bought the naming rights to an arena in Miami.

but Cryptocurrency price collapse In 2022 it negatively affected FTX, which eventually led to its downfall. Alameda Research, an affiliate of FTX's hedge fund, bought billions of dollars in various cryptocurrency investments that lost significant amounts of value in 2022. Bankman-Fried attempted to plug holes in Alameda's balance sheet with FTX clients' money.

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

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

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