Disgraced cryptocurrency wunderkind, Sam Bankman-Fried was sentenced to 25 years in prison on Thursday, a remarkable reversal for a guy who appeared prepared to lead an emerging sector less than two years ago.
US District Judge Lewis Kaplan said the defendant, who went by the initials “SBF,” showed no “real remorse,” even in his final pre-sentencing remarks, in which the former billionaire lamented “a series of bad decisions” but denied willfully breaching financial rules.
Bankman-Fried said: “Mistakes were made, but never a word of remorse for the commission of a terrible crime,” said Kaplan, who described the offenses as “brazen” and chastised the defendant for his “exceptional flexibility” in seeking the truth.
Kaplan imposed a sentence of 25 years in prison followed by three years of supervised release. The defendant was also compelled to pay $11 billion, which is the sum that Bankman-Fried effectively stole from other parties, according to Kaplan’s calculations.
Thursday’s sentencing came after Bankman-Fried was convicted by a federal jury in New York in November 2023, despite previously appearing on the cover of financial periodicals and financing splashy Super Bowl television advertising in 2022.
The Justice Department hailed the sentence, despite the fact that it was less than the government’s request of 40-50 years.
“Today’s sentence… is an important message to others who might be tempted to engage in financial crimes that justice will be swift, and the consequences will be severe,” said US federal prosecutor Damian Williams.
Bankman-Fried’s parents, Stanford law professors Joseph Bankman and Barbara Fried, said in a statement: “We are heartbroken and will continue to fight for our son.”
Financial serial killer?
Bankman-Fried has risen to the pinnacle of the cryptocurrency sector, becoming a billionaire before the age of 30 and growing FTX, a modest start-up he cofounded in 2019, into the world’s second largest exchange platform.
However, in November 2022, Bankman-Fried’s meteoric rise came crashing down, with a flood of customer withdrawals following discoveries that billions of dollars had been unlawfully transferred from FTX to Bankman-Fried’s personal hedge fund, Alameda Research.
In court, defense counsel Marc Mukasey described Bankman-Fried as a well-meaning “awkward math nerd,” rather than a cold-hearted figure like famed Ponzi scheme operator Bernie Madoff.
“It’s obviously a serious offense, but Sam was not a financial serial killer who set out to hurt people,” Mukasey said.
During the hearing, Bankman-Fried expressed regret about the firm’s demise, which also affected many colleagues.
They “built something beautiful,” Bankman-Fried said. “And I threw it all away. It haunts me every day. I made a series of bad decisions.”
Bankman-Fried said he was anguished that FTX victims had not been compensated — something he said “begs a question of why they haven’t been paid back.”
‘Often evasive’
However, speaking following Bankman-Fried, federal prosecutor Nicolas Roos stated that the defendant continued to downplay his crimes, stressing that the impact was “not a bloodless financial loss on paper.”
Roos highlighted “immediate” financial devastation to FTX victims, including a Portuguese investor whose daughter was born the day before the implosion and a married couple of pensioners forced to return to work.
Kaplan concurred with the government’s fundamental arguments.
The judge began the hearing by rejecting the defense’s attempts to persuade the court to regard billions of dollars in recoveries from the FTX bankruptcy as reducing the scope of the fraud.
Kaplan accused Bankman-Fried of witness tampering and cited at least three instances in which he gave false testimony.
“When he wasn’t outright lying, he was often evasive, hair-splitting, dodging questions,” Kaplan wrote about Bankman-Fried’s evidence.
The Justice Department developed its sentence recommendation in part to account for the possibility that Bankman-Fried may commit additional fraud if freed too early.
While Kaplan did not concur with the government’s full sentence, he acknowledged that a free Bankman-Fried would be risky.
Bankman-Fried could claim that “mistakes were made.” Others were to blame. “The bankruptcy people screwed up,” Kaplan stated. “It doesn’t take too much imagination to see the outline” of another story.
“But there is a risk that this man will be in a position to do something very bad, and it’s not a trivial risk,” said Kaplan, describing a hefty term as required to “disable” Bankman-Fried.