Sam Bankman-Fried was sentenced Thursday to 25 years in prison by a judge for stealing $8 billion from clients of the now-bankrupt FTX cryptocurrency exchange he founded, the latest step in the dramatic fall of the former billionaire wunderkind.
U.S. District Judge Lewis Kaplan handed down the sentence at a Manhattan court hearing after rejecting Bankman-Fried's claim that FTX clients didn't actually lose money and accused him of lying during his trial testimony. A jury found Bankman-Fried, 32, guilty on Nov. 2 of seven counts of fraud and conspiracy stemming from the 2022 collapse of FTX, in what prosecutors have called one of the largest financial frauds in U.S. history. Joined.
"He knew it was wrong," Kaplan said of Bankman-Fried before handing down the sentence. "He knew it was a crime. He regrets having made a very bad bet on the likelihood of being caught. But he's not going to admit anything, as he has the right to do."
Bankman-Fried stood with his hands clasped in front of him as Kaplan read the sentence.
Bankman-Fried, dressed in a beige short-sleeved jailhouse T-shirt, acknowledged during 20 minutes of comments before the judge that FTX customers had suffered and offered an apology to his former FTX colleagues.
The sentencing marked the culmination of Bankman-Fried's fall from an ultra-wealthy businessman and major political donor to the biggest trophy yet in a crackdown by US authorities on misconduct in cryptocurrency markets. Bankman-Fried has vowed to appeal his conviction and sentence.
Kaplan said he had discovered that FTX clients lost $8 billion, FTX equity investors lost $1.7 billion and that lenders to the Alameda Research hedge fund, founded by Bankman-Fried, lost $1.3 billion.
"Defendant's claim that FTX customers and creditors will be paid in full is misleading, logically erroneous and speculative," Kaplan said. "A thief who takes his loot to Las Vegas and successfully gambles away the stolen money is not entitled to a discount on his sentence by using his Las Vegas winnings to pay back what he stole."
The judge also said Bankman-Fried lied during his trial testimony when he said he did not know his hedge fund had spent client deposits taken from FTX.
Federal prosecutors had asked for a prison sentence of 40 to 50 years. Bankman-Fried's defense attorney, Marc Mukasey, had argued that a sentence of less than five and a half years would be appropriate.
Addressing the judge, Bankman-Fried said: "Clients have been suffering... I didn't mean to minimize that at all. I also think it's something that was missing from what I said over the course of this process, and I'm sorry for that."
Referring to her colleagues at FTX, Bankman-Fried told the judge: "They put a lot of themselves into this and I wasted it all. It haunts me every day."
Three of his former close associates testified as prosecution witnesses at the trial that he had ordered them to use FTX client funds to cover losses at Alameda Research.
Nicolas Roos, a prosecutor with the U.S. attorney's office in Manhattan, told the judge: "The criminality here is on a massive scale. It was pervasive in every aspect of the business."
During the hearing, Mukasey sought to distance his client from notorious fraudsters like Bernie Madoff.
"Sam was not a ruthless financial serial killer who set out every morning to harm people," Mukasey said, describing his client as an "awkward math nerd" who worked hard to recover clients' money after the collapse of FTX.
"Sam Bankman-Fried doesn't make decisions with malice in his heart," Mukasey added. "He makes decisions with math in his head."
Bankman-Fried testified in her own defense that she made mistakes such as failing to implement a risk management team, but denied that she intended to defraud anyone or steal clients' money.
Members of the U.S. Marshals Service brought him to the courtroom for the hearing. In attendance were his parents, Stanford University law professors Joseph Bankman and Barbara Fried.
CRYPTOGRAPHY RISE
Bankman-Fried, a graduate of the Massachusetts Institute of Technology, boomed the values โโof 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 curly, unkempt hair and his commitment to a movement known as effective altruism, which encourages talented young people to focus on making money and donating it to worthy causes. He was also one of the largest contributors to Democratic candidates and political causes ahead of the 2022 US midterm elections.
But prosecutors have said the responsible image he cultivated hid his embezzlement of client funds for years.
Several FTX clients have written to Kaplan expressing dismay that they will be compensated based on the value of their cryptocurrency at the time of FTX's bankruptcy, rather than the highest levels at which those assets currently trade.
Bankman-Fried has been detained at the Brooklyn Metropolitan Detention Center since August 2023, when Kaplan revoked his bond after discovering that he likely tampered with witnesses at least twice.
