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A US federal judge in the Southern District of New York has sentenced Sam Bankman-Fried, founder of bankrupt crypto exchange FTX, to 25 years in prison. In addition, Bankman-Fried has been ordered to forfeit $11 billion.
Last November, at the end of a month-long trial, Bankman-Fried—known colloquially as SBF—was found guilty of seven counts of fraud and conspiracy in connection with the collapse of FTX.
The exchange had fallen to pieces in November 2022 after running dry of funds with which to process customer withdrawals. The money was missing, the jury concluded, because Bankman-Fried had conducted an elaborate fraud whereby billions of dollars’ worth of user funds was swept into a sibling company and used to bankroll high-risk trading, venture bets, debt repayments, personal loans, political donations, and a lavish life in the Bahamas.
In a court filing, the US government described the affair as “one of the largest financial frauds in history.” Bankman-Fried had demonstrated “unmatched greed and hubris” and a “brazen disrespect for the rule of law,” it said.
“The judgment has to adequately reflect the seriousness of the crime. This was a very serious crime,” said Judge Lewis Kaplan, who presided over the case, before delivering the sentence. He cited the “enormous harm” inflicted by Bankman-Fried, the “brazenness of his actions,” and “his incredible flexibility with the truth.”
Kaplan also criticized Bankman-Fried for his conduct on the witness stand during trial. Not only did Bankman-Fried perjure himself, the judge claimed, he was also “evasive” and “hairsplitting” in his responses to the prosecution's questions. “I've been doing this job for almost 30 years, and I've never seen a performance quite like this,” said Kaplan.
As Bankman-Fried received the sentence, he stood with his head lowered and hands together, an incongruously placid expression on his face.
The sentencing completes a remarkable fall from grace. Between 2019 and 2022, Bankman-Fried steered FTX to a $32 billion dollar valuation, becoming for a time the world’s youngest self-made billionaire. The 32-year-old fraternized with regulators, politicians, sports stars, and supermodels. He won the adoration of venture capitalists, who fawned over him, and the media, which lionized him as the “next Warren Buffett” and the “Michael Jordan of crypto.” Privately, Bankman-Fried reportedly told others that he aspired to be the President of the United States.
In his sentencing statement, Judge Kaplan cited political aspiration as one of the underlying motives of Bankman-Fried’s crime, pointing to his enormous contributions to candidates on both the left and right as “the biggest political financial crime in history.”
“He wanted to be a hugely politically influential person in this country,” Kaplan said. “The goal was power and influence.”
Instead of that political future—at least for years to come—Bankman-Fried will be consigned to a far less illustrious life in prison.
In considering the appropriate sentence for Bankman-Fried, the judge was required to take into account a blend of factors beyond the details of the underlying crimes. Those include the extent of the financial losses dealt upon the victims, the defendant’s character and history, whether any obstruction of justice had taken place, the likelihood of recidivism, and so forth.
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“The defendant is considered as a whole by the court—for his good and his bad,” says Joshua Naftalis, a former US prosecutor and partner at law firm Pallas Partners. If the objective at trial is to assess a “snapshot” of someone’s behavior, he says, the aim of sentencing is to “take a full measure of the man.”
The prosecution had requested a sentence of up to 50 years, while Bankman-Fried’s legal counsel had petitioned the court for leniency. Those who cast their client as an “ice-cold manipulator” or “man with no morals,” the defense wrote, “don’t know the true Sam Bankman-Fried.” They emphasized his history of philanthropy, his veganism, and his anhedonia—a condition that ostensibly means he is unable to feel happiness.
The defense’s court filing was supplemented with letters from Bankman-Fried’s family members and various associates, testifying to his good character, remorse, and utilitarian ideals. “The public perception of Sam could not be further from the truth,” wrote Barbara Fried, his mother. “Being consigned to prison for decades will destroy Sam as surely as would hanging him, because it will take away everything in the world that gives his life meaning.”
Bankman-Fried’s counsel argued for a shorter sentence given that FTX creditors are on track to recover their money in full at the end of the bankruptcy process—although not everyone’s happy with the outdated valuation of the assets, given crypto’s recent meteoric rise in price. They also dismissed the government’s claim that Bankman-Fried would reoffend if allowed to reenter society too quickly as “conjecture on top of hypothetical on top of supposition.” Bankman-Fried deserved no more than six-and-a-half years in prison, his counsel claimed.
The judge was unsympathetic. “I reject entirely the defendant’s argument that there was no actual loss,” he said, describing the proposition as “misleading,” “logically flawed,” and “speculative.”
In assessing the likelihood of recidivism, Kaplan homed in on Bankman-Fried’s appetite for risk. The judge described him as a “math nerd” whose decisionmaking framework was guided primarily by “EV,” or expected value. “In other words, this is a man willing to flip a coin as to the chance of life's continued existence on Earth. That's a leitmotif of this entire case,” he said. “There is a risk this man will do something very bad in the future.”
The problem for Bankman-Fried is that he can “never put the toothpaste back in the tube,” says Paul Tuchmann, another former US prosecutor and partner at law firm Wiggin and Dana. The fact that FTX users are set to recover money at an unspecified future date “does not nearly undo the harm they suffered” in the intervening period, he says. In one victim impact statement, an FTX customer said they had subsisted on ham, cheese, and ketchup sandwiches after the exchange’s collapse. In another, John Ray III, the restructuring professional steering FTX through bankruptcy, wrote that customers “will never be returned to the same economic position they would have been in today absent [Bankman-Fried’s] colossal fraud,” because the bankruptcy claims aren’t based on current crypto values.
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The US Department of Justice made play of these issues in its own presentence filings, pressing home the gravity of Bankman-Fried’s crimes, the range and number of his victims, and the way he obstructed the investigation by allegedly giving “false testimony” on the stand.
The government also underlined the need to deter would-be crypto fraudsters, suggesting that “some individuals have operated under the misimpression that they are unregulated, not subject to criminal laws, or can avoid scrutiny or significant jail time.” Until the fall of FTX, the DOJ had secured few landmark crypto convictions, despite forming a specialist crypto-crime task force in 2021. But in sentencing Bankman-Fried, who had become an almost messianic figure in crypto, the judge could elect to “send a message” to the industry, says Tuchmann.
With sentencing complete, Bankman-Fried will be returned to the temporary holding facility in which he has been kept since his arrest, until the Federal Bureau of Prisons selects a permanent destination. The judge recommended Bankman-Fried be housed in a low-to-medium-security facility as close as possible to the San Francisco Bay Area, where his parents reside. A decision will be reached within the next few months.
In the federal system, there is no possibility of parole. The best Bankman-Fried can hope for—short of winning on appeal—is early release for good behavior.
Addressing the court before receiving his sentence, Bankman-Fried gave the impression he had already resigned himself to a heavy sentence. “I made a series of bad decisions. They weren't selfish decisions. They weren't selfless decisions. They were bad decisions,” he said. “My useful life is probably over. It’s been over for a while now—since before my arrest.”
The DOJ has frequently compared the FTX founder to Ponzi fraudster Bernie Madoff, who received a prison sentence of 150 years. But even the sentence requested by Bankman-Fried’s counsel feels long, says Naftalis, given the differences between the two cases. “This isn’t Madoff,” he says. “SBF was on top of crypto, but crypto is not Wall Street. Let’s remember that.”
In whatever facility, Bankman-Fried’s incarceration will be far from comfortable. “Just think about it,” says Naftalis. “A day in jail is a long time.”
Additional reporting by Andy Greenberg.
