MANHATTAN (CN) — A New York federal judge on Thursday sentenced former cryptocurrency mogul Sam Bankman-Fried to 25 years in prison for “the very serious crime” of looting $8 billion from defrauded FTX customers. U.S. District Judge Lewis A. Kaplan also ordered a financial penalty of over $11 billion.
“He knew it was wrong. He knew it was criminal,” Kaplan said prior to setting the punishment, noting that Bankman-Fried may have admitted to “fucking up,” but he has yet to offer “a word of remorse for the commission of terrible crimes.”
"There is a risk that this man will be in a position to do something very bad in the future and it's not a trivial risk, not a trivial risk at all,” the Clinton-appointed judge said. “So, in part, my sentence will be for the purpose of disabling him — to the extent that can be done — for a significant amount of time."
Bankman-Fried, 33, was arrested in the Bahamas in December 2022, a month after the abrupt collapses of FTX, the cryptocurrency exchange platform he opened in 2019, and Alameda Research, the cryptocurrency hedge fund he started in 2017.
Bankman-Fried’s lawyers asked Kaplan in a sentencing submission for less than seven years — between 63 and 78 months — in prison, citing his “charitable works and demonstrated commitment to others.”
Marc Mukasey, a former prosecutor Bankman-Fried hired to handle his sentencing, said Bankman-Fried was “not a ruthless financial serial killer who set out every morning to hurt people.”
“Sam is on the opposite end of the culpability scale that they talk about for fraud crimes,” Mukasey said.
Bankman-Fried’s defense pointed at his “dedication” to altruism and philanthropy to rebuff the prosecution’s portrayal of his “supposedly insatiable lust for power.”
“Sam Bankman-Fried made a real, authentic commitment to doing good,” Mukasey said “And his commitment to doing good made other people do good.”
Wearing khaki tan prison garb, Bankman-Fried gave a meandering 20-minute statement in which he took responsibility for his “mismanagement” of his companies and expressed hope that all customers, investors, creditors and lenders are made whole for Alameda’s and FTX’s losses.
“There was, to be fair, a liquidity crisis,” he said. “That was, in part, my doing. That was a mess.”
“It haunts me every day,” he said. “I made a series of bad decisions; They weren’t selfish decisions, they weren’t selfless decision, they were just bad decisions.”
“My useful life is probably over,” he continued. “I’ve long since given everything I need to give.”
Prosecutors meanwhile asked for a prison sentence of 40 to 50 years — half of the 100-year prison term recommended by federal probation officials in their presentence investigation report — for Bankman-Fried’s orchestration of one of history’s largest financial frauds in his pursuit to dominate the cryptocurrency world, in addition to judgment of $11 billion.
The financial judgment ordered by Kaplan is comprised of $11 billion in seized digital assets to repay victims of the fraud for their estimated losses: $8 billion to customers, $1.7 billion to investors, and $1.3 billion to lenders.
U.S. Attorney for the Southern District of New York Damian Williams applauded the sentence on Thursday afternoon, calling Bankman-Fried's crime "one of the largest financial frauds in history."
"His deliberate and ongoing lies demonstrated a brazen disregard for customers’ expectations and disrespect for the rule of law, all so that he could secretly use his customers’ money to expand his own power and influence," Williams wrote in a news release announcing the sentence.
"The scale of his crimes is measured not just by the amount of money that was stolen, but by the extraordinary harm caused to victims, who in some cases had their life savings wiped out overnight," Williams said.
Thursday’s sentencing concludes the rapid fall from grace for Bankman-Fried, who graduated from the Massachusetts Institute of Technology in 2014 and just several years later had accrued an estimated net worth that peaked at $26.5 billion. He had pledged to pursue the guiding principles of “effective altruism” by donating most of this wealth to popular causes.
Last November, a jury in Manhattan federal court found him guilty on all charges for looting FTX customers’ online deposits to bankroll Alameda’s venture capital gambles and cryptocurrency futures trades.
At trial, federal prosecutors accused Bankman-Fried of operating a “pyramid of deceit” that defrauded his companies’ customers, investors and lenders.
Prosecutors showed jurors evidence that Bankman-Fried spent billions of dollars of customer money on real estate purchases, straw donations to politicians, celebrity endorsements and publicity deals, in addition to large venture capital investments.
“Sam Bankman-Fried stole over $8 billion in customer money,” assistant U.S. Attorney Nicolas Roos said at the sentencing hearing. “I emphasize ‘stole’ because it was not a liquidity crisis or an act of management or poor oversight from the top — it was the theft of billions of dollars from customers spread all over the world.”
Three former executives from FTX and Alameda — Alameda co-CEO Caroline Ellison, FTX co-founder Gary Wang and former FTX Director of Engineering Nishad Singh — pleaded guilty to criminal charges and testified at trial as key prosecution witnesses, under cooperation agreements.
Ellison, Wang, and Singh will be sentenced at a later date.
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