On Thursday, Sam Bankman-Fried strode into a Manhattan courtroom for the conclusion of his criminal trial, hoping he would face only a handful of years in prison for charges related to the collapse of his crypto exchange.
Instead, Judge Lewis Kaplan chose a harsher penalty, sentencing the 32-year-old to 25 years in prison.
“The judgment has to adequately reflect the seriousness of the crime, and this was a very serious crime,” Kaplan said.
The stunning rise and fall of Bankman-Fried, once one of the most powerful figures in the high-flying crypto industry, captivated the public, with the FTX founder going from billionaire wunderkind to prison inmate seemingly overnight. His trial also became a referendum on the turbulent sector, which collapsed into a bear market alongside FTX’s failure.
Thursday’s sentencing marks the end of the saga, though Bankman-Fried’s lawyer said he would appeal his conviction.
Fall from grace
Bankman-Fried served as the face of crypto’s last bull run, with his tousle-haired visage displayed on billboards and advertisements. FTX, which he founded in 2019, grew to a valuation of over $30 billion, drawing prominent investors such as Sequoia Capital and the Singapore sovereign wealth fund Temasek. Bankman-Fried also became a top advocate for the industry, flying in from his home base of the Bahamas to frequently appear in Washington, D.C., and push lawmakers for regulation.
Despite his rapid success, the unusual setup of FTX and its related trading firm, Alameda Research, raised red flags, with the crypto trade outlet CoinDesk publishing a balance sheet in November 2022 that seemed to show Alameda’s overreliance on the outfit’s proprietary crypto token, FTT. The entire operation collapsed that month.
As Bankman-Fried scrambled to rebuild his empire, details emerged about FTX funneling customer deposits to Alameda to cover up holes from disastrous trades and extravagant expenses on real estate and startup investments. At the request of U.S. authorities, Bahamian authorities arrested Bankman-Fried in December 2022 and extradited him later that month to the U.S., where he was charged by the Department of Justice with criminal counts including fraud and conspiracy.
As the proceedings began, Bankman-Fried was granted bail and allowed to stay with his parents in Palo Alto, Calif.—an arrangement that fell apart after Kaplan, who oversaw the case, found that Bankman-Fried had leaked documents to the New York Times. The former FTX CEO has been kept at the Metropolitan Detention Center, a facility in Brooklyn notorious for its poor conditions, since August.
Bankman-Fried’s jury trial began in early October, with DOJ prosecutors and defense lawyers jostling over whether the collapse stemmed from intentional fraud or simply was a situation that got out of hand. For nearly a month, many of Bankman-Fried’s closest associates, including his former girlfriend and Alameda CEO Caroline Ellison, took the stand, portraying him as a controlling founder who understood the crimes that he was committing. On Nov. 2, the 12-person jury sided with the prosecutors, finding Bankman-Fried guilty on all seven counts. The DOJ decided not to continue with a second trial that would have brought additional charges including campaign finance violations.
Sentencing
Although Bankman-Fried faced over 100 years in prison, both prosecutors and his defense lawyers had asked for a more lenient sentence, with prosecutors pushing for 40 to 50 years, and his team asking for six and a half years or less.
Central to the defense’s argument was the recovery of most of the funds lost as part of FTX’s bankruptcy, with a recent rally in crypto prices—and the unraveling of the empire’s corporate web—allowing the estate to likely pay back customers, at least at the prices of the crypto assets at the time of the collapse.
“Sam Bankman-Fried has been described as a ‘sociopath,’ ‘a man with no morals, remorse, or empathy,’ who is an ‘an ice-cold manipulator, bully, and shameless liar,’” his attorneys wrote in their recommendation to Kaplan. “They don’t know the true Sam Bankman-Fried.”
Prosecutors—and the FTX bankruptcy estate—disagreed, arguing that Bankman-Fried should receive a sentence “commensurate with the extraordinary dimensions of his crimes.”
During Thursday’s sentencing, Bankman-Fried sat at the defense table in prison clothing, with two guards sitting behind him. He spoke before Kaplan, expressing regret for the losses to customers, although he did not admit to the crimes he was convicted of and insisted there were enough assets to pay back FTX users in full.
“It haunts me every day,” Bankman-Fried said. “It’s been excruciating to watch all of this unfold in slow motion.”
Nicolas Roos, an assistant U.S. attorney, refuted Bankman-Fried’s statements, saying that the collapse was not a result of mismanagement or a liquidity crisis. “It was a theft,” Roos said.
Noting Bankman-Fried’s lack of contrition, Kaplan said that the sentence had to reflect the crimes committed, though he did not agree with the prosecution’s initial recommendation of 40 to 50 years, instead sentencing Bankman-Fried to 25 years and recommending he be sent to a medium-security prison in the San Francisco Bay Area so his parents can more easily visit.
Bankman-Fried has 14 days to file an appeal.