Bankman-Fried sentenced to 25 years for multi-billion greenback FTX fraud

(Corrects headline and first paragraph to learn 25 12 months sentence, not 20 years)

By Luc Cohen and Jody Godoy

NEW YORK (Reuters) -Sam Bankman-Fried was sentenced to 25 years in jail by a choose on Thursday for stealing $8 billion from prospects of the now-bankrupt FTX cryptocurrency alternate he based, the final step within the former billionaire wunderkind’s dramatic downfall.

U.S. District Choose Lewis Kaplan handed down the sentence at a Manhattan court docket listening to after rejecting Bankman-Fried’s declare that FTX prospects didn’t really lose cash and accusing him of mendacity throughout his trial testimony. A jury discovered Bankman-Fried, 32, responsible on Nov. 2 on seven fraud and conspiracy counts stemming from FTX’s 2022 collapse in what prosecutors have referred to as one of many largest monetary frauds in U.S. historical past.

“He knew it was mistaken,” Kaplan stated of Bankman-Fried earlier than handing down the sentence. “He knew it was felony. He regrets that he made a really unhealthy guess in regards to the chance of getting caught. However he’s not going to confess a factor, as is his proper.”

Bankman-Fried, sporting a beige short-sleeve jail t-shirt, acknowledged throughout 20 minutes of remarks to the choose that FTX prospects had suffered and he provided an apology to his former FTX colleagues.

The sentence marked the end result of Bankman-Fried’s plunge from an ultra-wealthy entrepreneur and main political donor to the most important trophy thus far in a crackdown by U.S. authorities on malfeasance in cryptocurrency markets. Bankman-Fried has vowed to enchantment his conviction and sentence.

Kaplan stated he had discovered that FTX prospects misplaced $8 billion, FTX’s fairness traders misplaced $1.7 billion, and that lenders to the Alameda Analysis hedge fund Bankman-Fried based misplaced $1.3 billion.

“The defendant’s assertion that FTX prospects and collectors will probably be paid in full is deceptive, it’s logically flawed, it’s speculative,” Kaplan stated. “A thief who takes his loot to Las Vegas and efficiently bets the stolen cash isn’t entitled to a reduction on the sentence through the use of his Las Vegas winnings to pay again what he stole.”

The choose additionally stated Bankman-Fried’s lied throughout his trial testimony when he stated he didn’t know that his hedge fund had spent buyer deposits taken from FTX.

Federal prosecutors had sought a jail sentence of 40 to 50 years. Bankman-Fried’s protection lawyer Marc Mukasey had argued {that a} sentence of lower than 5-1/4 years could be applicable.

Addressing the choose, Bankman-Fried stated, “Prospects have been struggling… I did not in any respect imply to attenuate that. I additionally suppose that is one thing that was lacking from what I’ve stated over the course of this course of, and I am sorry for that.”

Referring to his FTX colleagues, Bankman-Fried instructed the choose, “They put a whole lot of themselves into it, and I threw that every one away. It haunts me on daily basis.”

Three of his former shut associates testified as prosecution witnesses at trial that he had directed them to make use of FTX buyer funds to plug losses at Alameda Analysis.

Nicolas Roos, a prosecutor with the U.S. Legal professional’s workplace in Manhattan, instructed the choose, “The criminality right here is huge in scale. It was pervasive in all points of the enterprise.”

Through the listening to, Mukasey sought to distance his consumer from infamous fraudsters like Bernie Madoff.

“Sam was not a ruthless monetary serial killer who set out each morning to harm folks,” Mukasey stated, describing his consumer as an “awkward math nerd” who labored laborious to get prospects their a reimbursement after FTX’s collapse.

“Sam Bankman-Fried does not make choices with malice in his coronary heart,” Mukasey added. “He makes choices with math in his head.”

Bankman-Fried testified in his personal protection that he made errors reminiscent of not implementing a threat administration group, however denied he supposed to defraud anybody or steal prospects’ cash.

He was led into the courtroom for the listening to by members of the U.S. Marshals Service. His dad and mom, Stanford College legislation professors Joseph Bankman and Barbara Fried, attended.

CRYPTO BOOM

A Massachusetts Institute of Know-how graduate, Bankman-Fried rode a increase within the values of bitcoin and different digital belongings to a web value of $26 billion, in response to Forbes journal, earlier than he turned 30.

Bankman-Fried grew to become identified for his mop of unkempt curly hair and dedication to a motion referred to as efficient altruism, which inspires gifted younger folks to deal with incomes cash and giving it away to worthy causes. He additionally was one of many largest contributors to Democratic candidates and political causes forward of the 2022 U.S. midterm elections.

However prosecutors have stated the accountable picture he cultivated hid his years-long embezzlement of buyer funds.

A number of FTX prospects have written to Kaplan expressing dismay that they are going to be compensated primarily based on the worth of their cryptocurrency on the time of FTX’s chapter, relatively than the upper ranges at which these belongings at present commerce.

Bankman-Fried has been detained on the Metropolitan Detention Heart in Brooklyn since August 2023, when Kaplan revoked his bail after discovering he doubtless tampered with witnesses no less than twice.