Sam Bankman Freed shows little remorse after being sentenced to 25 years in prison for $11 billion FTX cryptocurrency fraud – DL News

A federal judge in the Southern District of New York sentenced Sam Bankman Fried on Thursday, citing the former FTX CEO's “apparent lack of remorse,” “extraordinary flexibility with respect to the truth,” and “brazenness” of his misconduct. He was sentenced to 25 years in prison. .

His term was about half the 40 to 50 years sought by prosecutors.

U.S. District Judge Lewis Kaplan's sentence comes five months after Bankman Fried was convicted by a federal jury of seven counts of fraud and conspiracy related to the November 2022 FTX collapse. Ta.

Bankman Freed's attorney, Mark Mukasey, said he plans to appeal the jury's verdict. He has 14 days to file an appeal.

“Have a great influence”

Defendants typically express remorse in order to get their sentences reduced, but Bankman-Freed, wearing a beige prison uniform and with ankles shackled, stood and addressed the court during Thursday's hearing. At times, he took on a defiant tone.

Repeating his failed defense last November, he blamed FTX's collapse on his own “mismanagement” and “liquidity crisis” rather than outright fraud.

“[FTX customers] If I had kept the company, I might have been able to pay it back,” Bankman Fried said in a meandering plea for leniency.

“There were enough assets. There were enough assets. … It's not because of the rise in the price of cryptocurrencies.”

“Thieves who successfully transport their loot to Las Vegas and gamble their stolen money are not entitled to a reduced sentence.”

— U.S. District Judge Lewis Kaplan

Mr. Kaplan did not find this argument persuasive.

“Thieves who successfully bring their loot to Las Vegas and gamble their stolen money are not entitled to a reduced sentence,” Kaplan said at the beginning of the hearing.

Kaplan went on to offer a scathing assessment of Bankman Fried's character.

The judge cited testimony about Bankman Fried's risk-taking tendencies, citing the 32-year-old's apparent role in stealing $8 billion from FTX customers and $3 billion from the exchange's lenders and investors. accused of a lack of remorse.

“He knew it was wrong, he knew it was criminal, [but] He regrets taking such a bad bet on his chances of being caught,'' Kaplan said.

Kaplan described Bankman-Fried as “a very high-achieving autistic person” and said the former billionaire “wanted to be a very influential politician in this country.” said it was clear.

The judge also highlighted Bankman Freed's disastrous performance on the stand.

“Even when he wasn't outright lying, he would often dodge questions, haircuts, and dodge things,” Kaplan said. “I've been doing this job for 30 years. I've never seen a performance like that.”

Prosecutor Nicholas Roos argued that a long sentence was necessary to prevent Bankman-Freed from committing further crimes. He cited earlier comments by Mukasey, who said his client's decision was based on mathematics, not malice.

“That's troubling,” Ruth said. “Because if Mr. Bankman Freed thought the math was valid, he would do the same calculations again.”

Nevertheless, he said the government's recommended sentence was “more than necessary” to deter Bankman-Freed from committing similar crimes in the future and deter others from doing the same. “Significantly heavier''.

In addition to a 25-year prison term, Kaplan sentenced Bankman Fried to an $11 billion fine.

Kaplan recommended that Bankman-Freed serve his sentence in a medium- or low-security prison as close to his home in Northern California as possible. Bankman Freed, who is autistic and wealthy, could become a target for other inmates at a high-security prison for violent criminals, a judge said.

The sentence was more than four times longer than what Bankman Fried's attorneys had requested before Thursday's hearing.

FTX's new management said in January that it plans to fully repay customers at the value of its assets when FTX declares bankruptcy in November 2022.

“The most reasonable estimate of loss is zero,” Bankman Freed attorneys wrote.

Moreover, FTX never lost any customer funds in the first place, it simply lacked “liquid assets.” Lawyers argued that Bankman Freed could have honored all of its customers' withdrawals if it had had more time to sell the company's assets.

critical discussion

This was an important argument for the defense because Bankman Fried's sentence depended largely on federal guidelines that recommend a certain amount of prison time depending on the amount of money stolen.

But I hadn't washed it.

Since the collapse of FTX, the market cap of all crypto tokens has nearly tripled from just over $1 trillion to $2.6 trillion, according to CoinMarketCap. Currently, customers who have deposited cryptocurrencies with FTX want to be repaid in cryptocurrencies, rather than in dollars, which represented the value of the cryptocurrencies at the time of FTX's bankruptcy filing.

One such customer, Sunil Kavri, spoke at the sentencing hearing. He said he had flown in from London to speak on behalf of other affected FTX customers and said Bankman Freed's claims to fully clear them were “a litany of lies.”

Another speaker, Florida-based attorney Adam Moskowitz, spoke about Bankman Fried's lawsuit against NFL superstar quarterback Tom Brady and other prominent FTX supporters. He cited his contributions and asked the judge for lenient treatment.

FTX was once the world's largest cryptocurrency exchange after Binance. Attracting top venture capitalist backers such as Sequoia Capital, FTX's valuation reached $32 billion in early 2022.

And Bankman Freed courted celebrity supporters like Brady, put the FTX brand in sports arenas, and bought flashy Super Bowl TV commercials.

Cryptocurrency prodigy

The crypto wunderkind has also bridged the gap with Wall Street by establishing strong ties with high-profile figures such as hedge fund manager and conference promoter Anthony Scaramucci.

And he donated millions of dollars to members of Congress and political action committees to increase his influence on Capitol Hill. It didn't hurt that his parents were prestigious law professors at Stanford University.

In Bankman Freed, the financial and political establishment finally found the face of the freewheeling crypto industry. Dressed in a vulgar chic in a wrinkled T-shirt and cargo shorts, Bankman-Fried plays the latest child prodigy to spin billions of dollars out of arcane techno-finance models.

SBF trial

But prosecutors, led by Assistant U.S. Attorney Daniel Sassoon, have crafted a powerful and convincing story that paints Bankman Fried as a fraudster who used the oldest trick in the book to defraud investors.

He commingled deposits, moved funds arbitrarily, and disobeyed many U.S. regulations because his company was based in Hong Kong and then the Bahamas.

Several former colleagues, including Caroline Ellison, testified that Bankman Freed funneled billions of dollars in FTX deposits to his crypto investment fund, Alameda Research, to cover losses in 2022.

They also told the jury that Mr. Bankman Freed was not a smart man who knew little about the day-to-day operations of his company. In contrast, he was a hands-on manager who designed and used backdoors to create bookkeeping at both FTX and Alameda.

The former cryptocurrency chief failed when he took the stand himself. He often could not remember details of his tenure at FTX and Alameda. His “I can't remember” remark to prosecutors became a meme among court attendees.

It took only a few hours for the jury to convict Bankman Freed. He will now spend the next 25 years repaying his debt to society.

Has been updated We will report on details of the sentencing hearing and Bankman Freed's appeal plans on March 28th.

Alex Gilbert is a correspondent for DL ​​News based in New York. The author can be contacted at: aleks@dlnews.com.