Sam Bankman-Fried, the disgraced cryptocurrency executive who was convicted of fraud in the spectacular collapse of the crypto exchange FTX, was sentenced to 25 years in prison on Thursday. The sentence, handed down by a federal judge in New York, capped an incredible fall from grace for a young financier who was once the poster boy for an emerging industry before joining the likes of Bernie Madoff as one of America’s biggest financial fraudsters ever.
Before he was sentenced, Bankman-Fried addressed the courtroom and apologized.
“A lot of people feel really let down, and they were very let down, and I am sorry about that.” he said. “I am sorry about what happened at every stage. And there are things I should’ve done and things I shouldn’t have.”
He said FTX’s downfall’s “haunts” him every day and that he repeatedly made bad decisions while at the company. He said seeing FTX’s customers suffer was painful, and that they don’t deserve it.
“My useful life is probably over,” he said. “It’s been over for a while now.”
As part of their pre-sentencing memos, Bankman-Fried’s lawyers argued that the bankruptcy process would compensate victims for any losses. But Judge Lewis Kaplan disagreed.
“I reject entirely that there was no actual loss,” Kaplan said.
Kaplan found that Bankman-Fried falsely testified that he did not know FTX’s sister company Alameda had spent FTX customer deposits before the crypto exchange collapsed.
The judge found that Bankman-Fried’s crimes resulted in losses to victims of more than $550 million — the maximum finding allowed under federal sentencing guidelines. Investors lost $1.7 billion, Alameda lenders lost $1.3 billion, and FTX customers lost $8 billion, the judge said.
Kaplan said Bankman-Fried is very smart and suffers from autism. He agreed with prosecutors that he wanted to become a powerful politician in the country, which is what drove his financial crimes.
Nicolas Roos, a federal prosecutor in the case argued that FTX was infused with criminality throughout its creation.
“Sam Bankman-Fried stole over $8 billion in customer money, and I emphasize stole because it was not a liquidity crisis, or an active mismanagement, or poor oversight from the top,” Roos said. “It was not a bloodless financial loss on paper.”
Bankman-Fried, also known as “SBF,” launched the cryptocurrency exchange FTX in 2019. As the COVID-19 pandemic later boosted cryptocurrency trading worldwide, FTX rode the wave. In 2020, FTX purchased Blockfolio, the market’s leading mobile news and portfolio tracking app, for $150 million. Bankman-Fried appeared as a speaker at various crypto and blockchain conferences, attracting a large following.
But in November 2022, the crypto news website CoinDesk reported on FTX’s poor balance sheet and liquidity crisis. Big names such as cryptocurrency exchange Binance opted not to provide any support to FTX or Bankman-Fried.
FTX quickly collapsed, resulting in a loss of $10 billion in customer funds. This had a ripple effect on other crypto companies, throwing them into financial turmoil. Several companies with direct or indirect connections to FTX — including BlockFi, Voyager, Celsius, Genesis, and Gemini — went bankrupt in a matter of weeks. The cryptocurrency market saw its darkest period to-date, resulting in a loss of more than $1 trillion, and Bitcoin’s price dropped below $18,000.
Federal prosecutors later filed both criminal and civil charges against Sam Bankman-Fried and other top FTX executives in late 2022. They were accused of misappropriating $10 billion in customer deposits and with generating false financial statements. The court appearances of FTX’s top executives attracted widespread attention — as did their romantic lives.
In November of 2023, a federal jury in New York convicted Bankman-Fried of fraud on seven different fraud and conspiracy charges and stealing at least $10 billion from customers and investors.
Born in 1992 in California, Bankman-Fried grew up in an academic family, with both of his parents professors at Stanford Law School. He earned a physics degree with a minor in mathematics from MIT in 2014. While in the program, he worked as an intern in 2013 for the trading firm Jane Street Capital in New York. It was there that he met Caroline Ellison, who later became his girlfriend. Ellison became the CEO of Alameda Research, a quantitative cryptocurrency trading firm and SBF’s first company, founded in 2017. It was later discovered that he built FTX to support Alameda’s trading business.
This is a developing story and will be updated.