Founder of the cryptocurrency exchange FTX, Sam Bankman-Frida, has been sentenced to 25 years in prison for large-scale fraud and conspiracy, resulting in the collapse of his company and the Alameda Research hedge fund linked to it. The punishment, handed down by Judge Lewis Kaplan, is less severe than the 40-50 years sought by federal prosecutors but much harsher than the 5-6.5 years proposed by Bankman-Frida’s defense team.
Judge Kaplan, in delivering the verdict against the 32-year-old Bankman-Frida, highlighted concerns about the risk of the convict committing future crimes, noting that the risk was significant. Kaplan also noted the lack of remorse or apologies from Bankman-Frida for the “terrible crimes” he committed, pointing to his evasive answers during testimony.
Bankman-Fried, the founder of the once $32 billion company, was found guilty of 7 criminal charges, including securities fraud leading to approximately $10 billion in client fund losses. Prosecutors alleged that Bankman-Fried orchestrated a conspiracy to misappropriate customer funds for investments, political donations to major U.S. political parties, personal expenses, and loan repayments for Alameda Research.
Before the sentencing, Bankman-Fried expressed regret, suggesting that the loss of billions of dollars in client funds was due to a “liquidity crisis” or “mismanagement,” not fraud. He acknowledged his role as FTX’s CEO and expressed hope that customers would eventually recover their funds, despite uncertainties from the Federal Bankruptcy Court regarding fund returns.
Prosecutors and victims criticized Bankman-Fried for the extensive harm caused to customers worldwide. Prosecutor Nicholas Rus described the FTX collapse not as a crisis or mismanagement but as a “theft” of client funds amounting to billions of dollars.
Following the verdict, a statement from Merrick Garland highlighted the Bankman-Frida case as one of the largest financial frauds in history, showcasing a disregard for customer expectations and law enforcement. The Bankman-Frida family expressed disappointment with the sentence and pledged to continue the legal battle.