Sam Bankman-Fried, the disgraced cryptocurrency executive, will receive his prison sentence on Thursday. If prosecutors get what they want, the former CEO of the failed cryptocurrency exchange FTX could serve 40 to 50 years in prison.
Here’s what you should know.
Who is Sam Bankman-Fried?
Sam Bankman-Fried, also known as “SBF,” launched the cryptocurrency exchange FTX in 2019, and it went bankrupt in 2022. Born in 1992 in California, he 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 would become 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.
What was FTX?
Bankman-Fried co-founded the crypto exchange FTX in 2019 with American computer programmer Gary Wang. 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. SBF appeared as a speaker at various crypto and blockchain conferences, attracting a large following.
How did it collapse, and what happened next?
In November 2022, the crypto news website CoinDesk reported on FTX’s poor balance sheet and liquidity crisis. Big names such as cryptocurrency exhange Binance opted not to provide any support to FTX or Bankman-Fried.
The cryptocurrency exchange collapsed overnight, 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.
What was Sam Bankman-Fried convicted of?
Once a crypto icon, Sam Bankman-Fried became a fraudster. Federal prosecutors 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 for stealing at least $10 billion from customers and investors.
What sentences are prosecutors and defense lawyers seeking?
When he returns to court today, Bankman-Fried will be sentenced. Prosecutors are seeking 40-50 years in prison, while Bankman-Fried’s lawyers are asking for only 5-6 years in prison. His lawyers have cited medical conditions including neurodiversity and autism, making him “uniquely vulnerable in a prison population,” as well as Bankman-Fried’s desire to make “the world a better place” and his remorse over the collapse of the crypto exchange.