Disgraced cryptocurrency entrepreneur Sam Bankman-Fried was sentenced to 25 years in prison Thursday for masterminding a multibillion-dollar fraud scheme.
Earlier in March, prosecutors recommended a sentence of 40-50 years, less than half the possible maximum for his sentences. They argued that this would be “commensurate with the extraordinary dimensions of his crimes” committed in his financial empire, FTX, which was the second largest cryptocurrency exchange until CEO Bankmann-Fried’s fall from grace in 2022.
The 32-year-old’s lawyers had asked for a 63-78 month sentence, citing his autism diagnosis and positive intentions when he started his company in 2019.
Bankman-Fried was convicted in November of all seven charges he faced for overseeing massive electronic media fraud, securities fraud and money laundering at FTX, where he bilked clients and investors of as much as $10 billion on the platform . A New York court jury sided with prosecutors’ allegations that he used those billions to fund venture capital investments, invest in luxury real estate, donate to political campaigns and pay off creditors of Alameda Research, a subsidiary of FTX.
His downfall marks a stunning reversal of fortune for a man who once graced magazine covers, headlined conferences and mingled with A-list celebrities and athletes.
At trial, Bankman-Fried testified that he never planned to defraud people of their investments and didn’t realize his company was billions of dollars in debt until the fall of 2022. His three days of testimony were widely considered a disaster, with the former a darling of the crypto world who blames other executives at the company and repeatedly answers the prosecutor’s questions with “I don’t remember.”
Meanwhile, his top associates testified that he ordered them to lie to the public and siphon billions of customer money from FTX to Alameda, which he was expressly prohibited from doing by FTX’s terms of service. Among the witnesses against him was Caroline Ellis, the CEO of Alameda and a former friend of Bankman-Fried, who said that FTX began to fall apart in the spring of 2022 with the collapse of the crypto market. Bankman-Fried, she said, directed her to provide one of Alameda’s largest lenders with a misleading balance sheet that hid how much money FTX had borrowed from its customers.
“I didn’t want to be dishonest, but I also didn’t want them to know the truth,” she testified.
“All in all, it was the worst week of my life,” Ellison said of the company’s collapse in the fall of 2022. “I felt this sense of relief that I didn’t have to lie anymore and that I could start taking responsibility even though I felt indescribably ill.”
Ellison pleaded guilty to fraud charges for her role in the scheme in exchange for cooperating with prosecutors.
It is possible that those defrauded by Bankman-Fried will get their payment back from him. His lawyers told the court last month that the investments he made with the stolen money have risen in value dramatically and they expect all of FTX’s customers and creditors to be repaid in full.
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