Jurors convicted Bankman Fried in November of charges including wire fraud, conspiracy to commit fraud and conspiracy to commit money laundering. He was accused of misappropriating FTX customer funds to splurge on luxury real estate, investments and political contributions.
Before Mr. Kaplan handed down his sentence, Mr. Bankman-Fried gave a meandering account of events in an attempt to justify some of his actions. “I made a series of bad decisions,” said Bankman Fried, who spoke for about 20 minutes. “Those weren't selfish decisions. … They were the wrong decisions.”
Prosecutors had argued that the case, one of the biggest financial crimes in history, was punishable by at least 40 years in prison. The defense argued that five to six years in prison was more appropriate for an autistic young man who wanted to use some of his wealth for charity.
Kaplan said the possibility that Bankman-Freed committed other crimes was also considered in the sentencing decision.
The judge said: “There is a risk that this man will be in a position to do very bad things in the future, and that is not a trivial risk.” “It's not a trivial risk.”
Mr. Bankman Fried, 32, turned FTX into a behemoth with Super Bowl ads, naming rights to Miami Stadium and hot promotion of a cryptocurrency exchange. It wasn't until the company fell into bankruptcy in 2022 that investigators uncovered what prosecutors described as a simple fraud disguised as a breakthrough financial innovation.
Prosecutors say Bankman Fried and his executives withdrew customer funds from FTX and deposited them with Alameda Research. Former Alameda CEO Caroline Ellison, who pleaded guilty to conspiracy charges before cooperating with prosecutors, testified at trial that Bankman Freed told her to spend FTX funds.
“It's difficult in some ways to understand how one person could be responsible for all these serious crimes,” Prosecutor Nicholas Roos said Thursday. “It's huge. It permeated every aspect.”
Before Ruth spoke, defense attorney Mark Mukasey argued that Bankman-Freed had no harmful intent.
“Sam was not a ruthless financial serial killer who was out to hurt people every morning,” Mukasey said Thursday. He described Bankman-Fried as someone who “doesn't make decisions with malice in his heart.” He thinks about mathematics in his head and makes decisions. ”
Mr. Kaplan spoke of the financial devastation to victims who had invested their savings in accounts on the FTX platform. In court filings, Bankman Freed's lawyers argued that victims are likely to recover if FTX is lifted. CEO John Ray III, who is filing for bankruptcy, criticized this argument in a letter to the court. The defense's assertion that FTX's customers and investors were not harmed is “callously and patently false,” Ray wrote.
Ahead of Thursday's hearing, some trial observers wondered whether the Justice Department went too far in seeking at least 40 years in prison. Martin Auerbach, a lawyer who has been involved in crypto cases but not Bankman Fried's case, said a full recovery of FTX assets would be a “dramatically devastating move” for investors. He said that the prosecution's argument that there was “a significant personal loss” could be overturned.
“That's part of the theory of why he should be punished,” Auerbach said before the hearing. “If these small investors get their money back in full or get much of their money back and it turns out to be incorrect, the judge has the discretion to say, 'I'm going to look at the loss differently.' I think there is.” “”
But Sheila Warren, CEO of the industry group Crypto Council for Innovation, said Bankman Freed's prison sentence sets an important example. “This sentencing is extremely important,” Warren said. “What we don't want to do is have people say, 'You can just pay a hefty fine and do whatever you want.' No, if you lie or steal, you're going to go to jail.” .”
She said she blamed not only Mr. Bankman-Fried, but also the many people who lionized him instead of questioning whether he was being honest. “There were a lot of institutions that supported this kind of magical mythology,” she says.
This is a developing story and will be updated.
