A federal judge sentenced Sam Bankman-Fried, the former billionaire who was found guilty of scamming clients and investors of his cryptocurrency exchange FTX, to 25 years in jail on Thursday after ruling that he committed perjury and tried witness tampering. The sentencing marks the end of an amazing rise-and-fall narrative in which Bankman-Fried, 32, was hailed as one of the world’s most successful entrepreneurs before losing more than $8 billion in FTX customer deposits.
Bankman-Fried’s sentence falls short of what federal prosecutors had hoped for: they recommended 40–50 years in prison due to the “extraordinary dimensions of his crimes” and the likelihood that he might commit another fraudulent scheme in the future. Bankman-Fried and his lawyers claimed that he should be sentenced to five to seven years.
In comparison, Bernie Madoff was sentenced to 150 years, Enron CEO Jeff Skilling to 24 years, and Theranos founder Elizabeth Holmes to 11 years.
On Thursday, Judge Lewis Kaplan used harsh language to attack Bankman-Fried and defend his sentencing. He claimed that Bankman-Fried perjured himself three times while under oath, including falsely declaring that he had no knowledge that his trading firm Alameda had used FTX customer funds until the fall of 2022. He stated that Bankman-Fried appeared to lack remorse and had “exceptional flexibility” with the facts, and that he had never seen as “evasive” a “performance” as Bankman-Fried’s in his 30 years as a judge.
Bankman-Fried apologized for his actions on the stand. “I failed everyone I cared about,” he admitted. “I made a series of bad decisions.” He maintained, however, that he could have paid back customers if he had been allowed to keep control of his company.”
What is multi-billion dollar FTX fraud?
Bankman-Fried’s imprisonment comes four months after he testified in a highly publicized trial, claiming that FTX’s collapse was caused by mistakes rather than malicious intent. Ultimately, he was found guilty of all seven of the criminal offenses charged by the Department of Justice; the jury took less than five hours to reach their verdict.
However, in November 2022, reports began to circulate concerning FTX’s precarious financial situation. When concerned clients began withdrawing money from the exchange at a rate of $120 million per hour, FTX quickly became unable to handle the demand and stopped processing withdrawals. Many customers had tens or hundreds of thousands of dollars frozen in their accounts, unable to be restored. A few days later, Bankman-Fried signed away control of the company, which promptly filed for bankruptcy.
During the trial in October, some of Bankman-Fried’s closest collaborators accused the former CEO of knowingly funneling funds from FTX depositors to his trading firm, Alameda Research, over several years. According to documents, Bankman-Fried then spent the funds on Bahamian real estate, startup investments, and political donations. “The money belonged to the customers, and they did not give us permission to use it for other purposes,” FTX co-founder Gary Wang testified.
Judge Lewis Kaplan, who chastised Bankman-Fried during the trial for his evasive method of answering questions, imposed punishment on Thursday. Kaplan also presided over E. Jean Carroll’s recent defamation lawsuit against Donald Trump.
Bankman-Fried faced up to 120 years in jail, however many of the offenses were identical and were not evaluated individually before sentencing. Over the previous few months, both parties have addressed letters to the judge pleading for either a shorter or lengthier sentence. Barbara Fried, Bankman-Fried’s mother, stated that her son has autism-related behaviors and that his inability to read and respond to social signs put him in danger while in prison.
In contrast, the prosecution side presented records that they claimed demonstrated Bankman-Fried’s persistent scheming and lack of remorse for his acts. Following the fall of FTX in November 2022, Bankman-Fried drafted documents outlining strategies for gaining public support. One of his suggestions was, “Go on Tucker Carlsen [sic], come out as a Republican”—despite the fact that he had been one of the largest Democratic fundraisers in the 2022 election cycle.
