NEW YORK -- Sam Bankman-Fried, the disgraced founder of FTX, the once-booming cryptocurrency exchange, was sentenced to 25 years in prison on Wednesday by a federal judge in New York. The judge also ordered the confiscation of $11.02 billion, roughly equivalent to 14.877 trillion won, in assets acquired through his crimes.
Judge Louis A. Kaplan of the Southern District of New York emphasized the potential danger Bankman-Fried posed, stating, "There's a risk this person could be in a position to do terrible things again, and that's not an insignificant risk." He elaborated that the sentence aimed to "neutralize him for a considerable period."
This sentence falls significantly short of the 40-50-year term prosecutors had sought. The legal maximum penalty was 110 years, while a federal probation officer recommended a century behind bars. Bankman-Fried's defense, on the other hand, argued for a sentence of only five to six and a half years.
In his final statement, Bankman-Fried expressed remorse to FTX customers, investors, and employees. He acknowledged the disappointment he caused, stating, "They threw themselves into it, and I threw it all away. That memory haunts me every day." He characterized his actions as "a series of bad decisions," not driven by greed.
His defense team attempted to portray him not as a malicious schemer but as someone who made strategic missteps. They claimed most FTX investors had recovered their funds. However, Judge Kaplan countered this argument, highlighting the significant losses incurred by FTX customers, hedge fund lenders, and investors in Alameda Research, Bankman-Fried's affiliated hedge fund.
In November 2023, a jury found Bankman-Fried guilty on seven counts. The charges stemmed from a multi-year scheme in which he allegedly diverted billions of dollars in customer funds from FTX to Alameda Research to cover debts and finance lavish real estate purchases in the Bahamas. Additionally, he faced accusations of illegal political contributions exceeding $100 million.
Bankman-Fried was deported from the Bahamas in December 2022 and was initially released on bail. However, his bail was revoked in August 2023, leading to his incarceration throughout the trial.
Just 18 months ago, Bankman-Fried was hailed as the "king of virtual currency," a young billionaire at the forefront of the crypto industry. He cultivated an image of a quirky philanthropist, his face plastered on advertisements and magazine covers, his association with celebrities, and his generous donations to charities.
However, in November 2022, a mass withdrawal request exposed an $8 billion hole in FTX's accounts, ultimately leading to bankruptcy. The following months saw Bankman-Fried's fraud unravel as three key FTX executives, including his former romantic partner, turned state witnesses and cooperated with prosecutors.
Following the sentencing, Bankman-Fried's parents, professors at Stanford University, released a statement expressing their heartbreak and vowing to fight for their son.
The New York Times reports that this sentence ranks among the harshest ever imposed on a white-collar criminal in the United States. Notably, Bernard Madoff, the architect of the infamous Ponzi scheme exposed during the 2008 financial crisis, received a 150-year sentence in 2009. However, due to his advanced age at the time (70s), he only served 12 years before passing away in prison at 82. Elizabeth Holmes, founder of the failed blood-testing startup Theranos, was sentenced to 11 years and three months in 2022 for fraud and conspiracy charges.
