FTX Founder Sam Bankman-Fried Sentenced to 25 Years for Historic Fraud

Sam Bankman-Fried, the founder of the now-defunct cryptocurrency exchange FTX, has been sentenced to 25 years in prison, marking an end to one of the largest criminal fraud cases in history. The sentence was handed down by Judge Lewis Kaplan in the Southern District of New York on March 28.

In making his determination, Judge Lewis Kaplan said he felt Bankman-Fried needed to have a long sentence because of his approach to viewing actions in terms of “expected value,” i.e., based on the probability of an event occurring and its potential cost or payoff. Otherwise, the judge felt Bankman-Fried might do something like this again.

Kaplan also cited Bankman-Fried’s lack of contrition.

“He knew it was wrong,” Kaplan said, according to Reuters. “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.”

In addition to his jail sentence, Bankman-Fried was ordered to forfeit roughly $11 billion in assets, and the judge recommended to the Bureau of Prisons that he be designated initially to a medium security facility “in view of the Court’s perception that defendant’s notoriety, his association with vast wealth, his autism and social awkwardness are likely to make him more than usually vulnerable in the environment of a high security facility.” The judge also recommended that he be jailed as close to the San Francisco Bay Area, where his parents live, as possible. The final determination of where he gets sent will be made by counsels within a little-known group called the Designation & Sentence Computation Center (DSCC).

Bankman-Fried’s sentencing comes after a jury found him guilty in November on seven counts, including wire fraud, money laundering, and violations of campaign finance laws. This verdict was the result of the Department of Justice’s extensive investigation into the collapse of FTX, which was once hailed as a revolutionary force in the cryptocurrency market, as well as that of Alameda Research, FTX’s sister hedge fund.

“This sentence balances the need to punish SBF for a fraud of epic proportions and deter others from emulating his crime, while at the same time giving SBF a light at the end of tunnel—an opportunity to be redeemed and return to society at an older, and hopefully wiser age,” Sam Enzer, a partner at Cahill Gordon & Reindel, told Unchained.

Enzer also said he felt the sentence was an important moment for the crypto industry as a whole.

“The sentence puts behind us a dark chapter and shows that our society has taken meaningful steps to purge the cryptocurrency sector of bad actors like SBF, to clear the way for the many honest entrepreneurs and technology developers seeking in good faith to innovate and build a brighter future for all of us with the transformative promise of blockchain technology,” Enzer said.

In a statement, Bankman-Fried’s parents, Barbara Fried and Joseph Bankman, said “We are heartbroken and will continue to fight for our son.”

Prosecutors had called for a sentence of 40 to 50 years, citing the “extraordinary dimensions” of Bankman-Fried’s crimes, which victimized tens of thousands across the globe over several years, as well as his failure to accept responsibility for his actions. Bankman-Fried’s defense team argued for a more lenient six-year sentence, countering the depiction of him as a villain and asserting that the financial impact of FTX’s collapse was overstated, with bankruptcy proceedings likely to make victims whole (a claim that FTX’s current CEO, John J. Ray, III, forcefully denied in his own letter to the court.)

What Judge Kaplan Said

In his remarks, Judge Kaplan said that Bankman-Fried’s way of looking at probability and judging whether he would get caught started early in his career and “continued into the end. It’s in his nature. Everybody has said that.”

He further noted that if Bankman-Fried were to have gotten out of prison in a reasonable amount of time, he would no doubt try to do something similar again. “The will is there,” Kaplan noted.

He also pointed to how SBF painted himself as the good guy in favor of regulation for the crypto industry. “In my judgement, that was an act. And he admitted it,” Kaplan said.

And talking about Bankman-Fried’s constant evasion and hairsplitting of questions by prosecutors during cross-examination by prosecutors in his criminal trial, Kaplan was blunt in his assessment.

“I’ve been doing this job for almost 30 years and I’ve never seen a performance like that,” Kaplan said.

A Swift Guilty Verdict

The case against Bankman-Fried outlined a complex web of deceit, involving taking $8 billion in customer and investor funds and using them for real estate purchases, venture investments, political donations, and charitable donations. Prosecutors painted a picture of a fraud that spanned multiple years and affected tens of thousands of victims across several continents. Despite the defense’s attempts to mitigate the severity of his actions, the overwhelming evidence led to a swift guilty verdict on all counts.

Throughout the trial, Bankman-Fried maintained his innocence and never admitted to any wrongdoing. His testimony, however, did little to aid his case, as his credibility was further undermined by the testimonies of several former associates who, after plea-bargaining, testified against him and revealed the inner workings of the scheme.

Fall of a Titan

Since August 2023, Sam Bankman Fried has been held at the Metropolitan Detention Center in Brooklyn. Prior to that, he had been held under house arrest at his parents’ home in Palo Alto. This initial leniency was revoked, however, after Bankman-Fried was found to have tampered with witnesses in the case, including his ex-girlfriend and former CEO of Alameda Research, Caroline Ellison.

Sam Bankman-Fried was originally arrested in the Bahamas at the behest of U.S. authorities in December 2022. The arrest followed an eight-count indictment that laid bare the extent of his alleged crimes, leading to a swift extradition and the beginning of a legal battle that would conclude with his recent sentencing. One count, that of bribing foreign officials, was dropped before trial but was to be included in a second trial of six additional charges, which prosecutors decided not to pursue after their unanimous victory in the first trial.

Prior to his arrest and the collapse of FTX, the crypto exchange that he co-founded, Sam Bankman-Fried was one of the world’s most notable crypto personalities and the world’s youngest billionaire.

UPDATED (March 28, 2024, 5:43 p.m. ET): Updated with further details of Bankman-Fried’s sentence and Judge Kaplan’s recommendations.

UPDATED (March 28, 2024, 2:59 p.m. ET): Updated with remarks from SBF’s parents and additional comments from Judge Kaplan.