Sam Bankman-Fried, from crypto star to prison

This Thursday, the former boss of the crypto exchange FTX was sentenced to 25 years in prison by a federal judge. The latter intends to appeal this decision.

Fallen cryptocurrency superstar Sam Bankman-Fried was sentenced Thursday to 25 years in prison for one of the worst financial frauds in recent history, after the judge notably found that he had expressed no remorse. He was found guilty by a jury in November of the seven counts brought against him during a trial at the end of which New York prosecutor Damian Williams requested between forty and fifty years in prison.

Federal Judge Lewis Kaplan did not mince his words during a hearing Thursday morning in New York, noting that the young man had acknowledged that “mistakes had been made, but never had a word of remorse for having committed a terrible crime.” Describing him as “insolent”, the magistrate denounced his “exceptional flexibility” regarding the truth.

According to him, with supporting examples, “SBF” – his nickname – engaged in at least three perjuries during his testimony at the five-week trial, as well as witness tampering. This increased the maximum possible sentence to 110 years. For his part, the thirty-year-old – who intends to appeal – apologized.

“A lot of people feel like they’ve been let down, and we’ve let them down, I’m sorry,” Sam Bankman-Fried said. “I’m sorry about what happened on every level.”

Broken Heart

His parents, Joseph Bankman and Barbara Fried, sent a very brief statement via their spokesperson: “We are heartbroken and we will continue to fight for our son”, who has just celebrated his 32nd birthday. In addition to the 25 years of imprisonment, “SBF” is subject to a sanction of 11 billion dollars – which could be used to compensate for possible customer losses – and will have a probation period of three years after his release, according to the Justice Department.

Damian Williams considered that this sentence would “forever prevent (Sam Bankman-Fried) from committing fraud” and that it sent an “important message” to those who would be tempted by white-collar crime that “justice will be swift and severe consequences. “SBF” used, without their consent, the assets of customers of its digital currency exchange platform FTX, to carry out risky transactions via its sister company Alameda, to purchase real estate or to make political donations.

“There are serious consequences for committing fraud against your customers and investors,” commented Merrick Garland, Minister of Justice, on Thursday, quoted in a press release.

Subject to massive withdrawal requests from panicked customers, FTX imploded in November 2022. At the time of its bankruptcy filing, around $9 billion was missing.

Sorcerer’s Apprentice

In a few hours, the image of the whimsical little genius, with his full head of hair and perpetual shorts and T-shirt, collapsed, giving way to that of a sorcerer’s apprentice, a fan of senseless bets. During Thursday’s hearing, “SBF” spoke about the company’s employees. They “built something magnificent,” he said. “And I screwed it up. It haunts me every day. I made a series of bad decisions.”

He also expressed concern that customers have not yet been fully refunded. The group’s liquidators have already recovered about $6.4 billion in cash and plan to fully reimburse injured customers. They are benefiting in particular from the brutal appreciation of cryptocurrencies, which have recovered after a catastrophic 2022 vintage marked by several bankruptcies and punctuated by the FTX scandal.

The former student of the Massachusetts Institute of Technology (MIT) was never accused of personal enrichment and kept, until the end, most of his fortune in FTX shares, the value of which evaporated. His new lawyer Marc Mukasey, recruited since the November verdict, described his client on Thursday as a “clumsy math nerd”, well-intentioned.

“This is obviously a serious offense but Sam is not a financial serial killer who decided to harm people,” noted the lawyer. But, according to Judge Kaplan, “there is a risk that this man will find himself in a position to do something wrong, and that is not a trivial risk.”

He therefore believed that a long prison sentence was necessary to “deactivate” Sam Bankman-Fried. During the trial, Sam Bankman-Fried’s defense was weakened by the testimonies of three former FTX and Alameda executives, including his former girlfriend, who all highlighted, in detail, the driving role of the accused in the fraud.