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

 

(Reuters) - Sam Bankman-Fried was sentenced to 25 years in prison by a judge on Thursday for stealing $8 billion from customers of the now-bankrupt FTX cryptocurrency exchange he founded, the last step in the former billionaire wunderkind's dramatic downfall.

U.S. District Judge Lewis Kaplan handed down the sentence at a Manhattan court hearing after rejecting Bankman-Fried's claim that FTX customers did not actually lose money and finding that he lied during his trial testimony. A jury found Bankman-Fried, 32, guilty on Nov. 2 on seven fraud and conspiracy counts stemming from FTX's 2022 collapse in what prosecutors have called one of the biggest financial frauds in U.S. history.

Kaplan said Bankman-Fried has shown no remorse.

"He knew it was wrong," Kaplan said. "He knew it was criminal. He regrets that he made a very bad bet about the likelihood of getting caught. But he is not going to admit a thing, as is his right."

Bankman-Fried, wearing a beige short-sleeve jail T-shirt, acknowledged during 20 minutes of remarks to the judge that FTX customers had suffered and he offered an apology to his former FTX colleagues - but did not admit criminal wrongdoing.

He has vowed to appeal his conviction and sentence.

Bankman-Fried stood with his hands clasped before him as Kaplan read the sentence. He then spoke with his defense lawyer Marc Mukasey briefly before being led out of the courtroom by members of the U.S. Marshals Service.

The sentence marked the culmination of Bankman-Fried's plunge from an ultra-wealthy entrepreneur and major political donor to the biggest trophy to date in a crackdown by U.S. authorities on malfeasance in cryptocurrency markets.

"There are serious consequences for defrauding customers and investors," U.S. Attorney General Merrick Garland said in a statement. "Anyone who believes they can hide their financial crimes behind wealth and power, or behind a shiny new thing they claim no one else is smart enough to understand, should think twice."

Kaplan found that FTX customers lost $8 billion, FTX's equity investors lost $1.7 billion, and that lenders to the Alameda Research hedge fund Bankman-Fried founded lost $1.3 billion. He imposed an $11 billion forfeiture order and authorized the government to repay victims with seized assets.

Federal prosecutors had sought a sentence of 40 to 50 years. Mukasey had argued for a sentence of less than 5-1/4 years.

'I'M SORRY FOR THAT'

Addressing the judge, Bankman-Fried said, "Customers have been suffering ... I didn't at all mean to minimize that. I also think that's something that was missing from what I've said over the course of this process, and I'm sorry for that."

Item 1 of 4 FTX cryptocurrency exchange founder Sam Bankman-Fried stands before U.S. District Judge Lewis Kaplan as he is sentenced to 25 years in prison, at Federal Court in New York City, U.S., March 28, 2024 in this courtroom sketch. REUTERS/Jane Rosenberg

[1/4]FTX cryptocurrency exchange founder Sam Bankman-Fried stands before U.S. District Judge Lewis Kaplan as he is sentenced to 25 years in prison, at Federal Court in New York City, U.S., March 28, 2024 in this courtroom sketch. REUTERS/Jane Rosenberg Purchase Licensing Rights, opens new tab

Referring to his FTX colleagues, Bankman-Fried added, "They put a lot of themselves into it, and I threw that all away. It haunts me every day."

Three former close associates testified as prosecution witnesses that Bankman-Fried had directed them to use FTX customer funds to plug losses at Alameda Research. All three have pleaded guilty to fraud.

Kaplan said Bankman-Fried lied when testified that he did not know Alameda Research had spent customer deposits taken from FTX.

Mukasey sought to distance Bankman-Fried from notorious fraudsters like Bernie Madoff, saying he was "not a ruthless financial serial killer" but rather an "awkward math nerd" who tried to get customers their money back after FTX's collapse.

"Sam Bankman-Fried doesn't make decisions with malice in his heart," Mukasey added. "He makes decisions with math in his head."

Bankman-Fried's eyes turned red as he appeared to hold back tears while Mukasey spoke.

His parents, Stanford University law professors Joseph Bankman and Barbara Fried, attended the sentencing. Bankman held a green umbrella as they exited the courthouse into a rainy New York afternoon, their arms around each other.

"We are heartbroken and will continue to fight for our son," they said in a statement.

'POWER AND INFLUENCE'

A Massachusetts Institute of Technology graduate, Bankman-Fried rode a boom in the values of bitcoin and other digital assets to a net worth of $26 billion, according to Forbes magazine, before he turned 30.

Bankman-Fried became known for his mop of unkempt curly hair and commitment to a movement called effective altruism, which encourages talented young people to focus on earning money and giving it away to worthy causes.

He was one of the biggest contributors to Democratic candidates and causes before the 2022 U.S. midterm elections. Kaplan pointed to trial evidence showing Bankman-Fried also donated to Republicans through "straw" donors to hide his involvement.

The judge called Bankman-Fried's efforts to present himself as a "good guy" an act, adding, "The goal was power and influence."

Bankman-Fried has been detained at the Metropolitan Detention Center in Brooklyn since August 2023, when Kaplan revoked his bail after finding he likely tampered with witnesses at least twice. Kaplan said he would recommend Bankman-Fried be sent to a prison close to San Francisco.

FTX will reportedly soon put Bahamas properties tied to Sam Bankman-Fried up for sale.

The bankrupt cryptocurrency exchange could start its effort of offloading the portfolio in the Caribbean nation as soon as April, when certain pieces of real estate are expected to appear on the market, Realtor.com reported Thursday.

The number of properties that FTX is looking to sell totals roughly three dozen, according to the real estate-focused site. They reportedly have a collective value of $222 million.

In this photo illustration, the logo of FTX, a cryptocurrency exchange is displayed on a smartphone screen. (Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images) (Pavlo Gonchar/SOPA Images/LightRocket via Getty Images) / Getty Images)

A source close to FTX told FOX Business the sales "will be primarily handled by the joint official liquidators in the Bahamas."

FTX and its bankruptcy administrators received permission to sell them from the U.S. Bankruptcy Court for the District of Delaware about two months ago.

The real estate, all located in the Bahamas, includes both residential and commercial assets, according to Realtor.com. In the latter category, the outlet reported that there were several offices that FTX had appraised at $25 million combined. 

As part of the effort, FTX is also looking to part ways with numerous condos and other residential real estate, including $151 million worth in the Albany Resort, according to Realtor.com.

The penthouse at The Albany in Nassau, Bahamas, which belongs to Sam Bankman-Fried, Friday, November 19, 2022. (AJ Skuy for Fox News Digital / Fox News)

That resort, which spans 600 acres, is where Bankman-Fried has his extremely high-end penthouse featuring a pool and bar.

The penthouse at The Albany in Nassau, Bahamas which belongs to Sam Bankman-Fried, Friday, November 19, 2022. (A.J. Skuy for Fox News Digital / Fox News)

FTX has been undergoing bankruptcy proceedings to pay back its creditors since the cryptocurrency exchange collapsed back in November 2022. 

Bankman-Fried, who co-founded the company, separately received a 25-year prison sentence on Thursday and a mandate to pay $11 billion in forfeitures in connection to FTX’s failure.

His sentencing came nearly five months after a jury had found him guilty of wire fraud, conspiracy to commit wire fraud, conspiracy to commit securities fraud, conspiracy to commit commodities fraud and one count of conspiracy to commit money laundering.

Former FTX CEO Sam Bankman-Fried arrives for a bail hearing at Manhattan Federal Court on August 11, 2023, in New York City.  (Michael M. Santiago/Getty Images / Getty Images)

Authorities said he had used FTX customer funds "for his personal use, to make investments and millions of dollars of political contributions to candidates from both parties, and to repay billions of dollars in loans owed by Alameda Research," according to the DOJ.

Bankman-Fried has said he will challenge both decisions through appeals.

His cryptocurrency exchange had been the third-largest prior to its collapse.