Sam Bankman-Fried sentenced to 25 years in prison

Barbara Fried and Joseph Bankman, parents of FTX founder Sam Bankman-Fried, exit the Manhattan Federal Court today in New York.

Bankman-Fried’s parents, Joe Bankman and Barbara Fried, issued a statement after leaving the Manhattan courtroom Thursday, saying: “We are heartbroken and will continue to fight for our son.”

Several prominent voices in the crypto community took issue with Sam Bankman Fried’s 25-year sentence, given Ross Ulbricht was sentenced to life in prison in 2015.

Ulbricht created Silk Road — a website that let users anonymously buy and sell anything, including drugs and hacking tutorials. Transactions on the site took place using bitcoin, making it much harder to trace.

Bitcoin Magazine, a crypto publication with more than 3 million followers, posted on X shortly after SBF was sentenced on Thursday:

Roger Ver, an early bitcoin investor often referred to as “bitcoin Jesus,” posted on X Thursday morning ahead of Bankman-Fried’s sentencing trial that Ulbricht’s “‘crime’ was building a website where people could trade freely without government permission.” Since Bankman-Fried’s sentence was announced, his post has been shared by many popular crypto-linked accounts.

Damian Williams, the US attorney for the Southern District of New York, said in a statement that Bankman-Fried’s 25-year sentence “will prevent the defendant from ever again committing fraud and is an important message to others who might be tempted to engage in financial crimes that justice will be swift, and the consequences will be severe.”

In this courtroom sketch, Sam Bankman-Fried, second from right, stands while making a statement during his sentencing in Manhattan federal court, Thursday, March. 28, 2024, in New York. Crypto entrepreneur Bankman-Fried was sentenced Thursday to 25 years in prison for a massive fraud that unraveled with the collapse of FTX, once one of the world's most popular platforms for exchanging digital currency.

There is no possibility of parole in federal criminal cases, but Bankman-Fried can still shave time off his 25-year sentence with good behavior.

“SBF may serve as little as 12.5 years, if he gets all of the jailhouse credit available to him,” Mitchell Epner, a former federal prosecutor, told CNN.

Federal prisoners generally can earn up to 54 days of time credit a year for good behavior, which could result in an approximately 15% reduction.

Since 2018, however, nonviolent federal inmates can reduce their sentence by as much as 50% under prison reform legislation known as the First Step Act.

Epner says the First Step Act was billed as a civil rights measure, to help minority offenders who committed non-violent drug-trafficking offenses. 

“It has turned out to be an enormous boon for white-collar criminal defendants, who are already given much lower sentences … than drug-traffickers,” Epner added. 

There is also a provision that allows a court to reduce a person’s sentence for extraordinary and compelling reasons, which are often medical, according to Jordan Estes, a former federal prosecutor who is now a partner at Kramer Levin.

“Since the pandemic, courts have been more willing to grant early release under this provision if the defendant has served a substantial portion of his or her sentence,” Estes said.

Sam Bankman-Fried on March 30, 2023 after leaving the Manhattan federal court in New York City.

Judge Lewis Kaplan said he would recommend to the Bureau of Prisons that Bankman-Fried be placed in a medium-security facility or any lower-security facility the bureau finds appropriate.

Medium-security federal prisons have strengthened perimeters — often double fences with electronic detection systems — and mostly cell housing, according to the Bureau of Prisons. They also have a “wide variety of work and treatment programs.”

FTX founder Sam Bankman-Fried attends his sentencing hearing at Federal Court in New York City, U.S., March 28, 2024 in this courtroom sketch.

Judge Kaplan also ordered a forfeiture of $11.02 billion.

He ruled Bankman-Fried’s forfeited assets can be used to help fund the repayment of victims of the FTX collapse.

Correction: A previous version of this post misstated the forfeiture amount. It is $11.02 billion.

Judge Lewis Kaplan, just before announcing Bankman-Fried’s 25-year sentence, said there was a risk “that this man will be in a position to do something very bad in the future, and it’s not a trivial risk.”

Bankman-Fried acknowledged his mistakes and said he was sorry for what happened to customers but “never a word of remorse for the commission of terrible crimes,” Judge Kaplan said.

“He knew it was wrong,” he added.

Sam Bankman-Fried has been sentenced to 25 years in federal prison for defrauding customers and investors in crypto exchange FTX.

Sam Bankman-Fried after a court appearance on June 15, 2023 at Manhattan Federal Court in New York City.

Kaplan says many facts are not disputed, including that SBF had “an exceptionally privileged background.”

“He is extremely smart. And he suffers from autism,” Kaplan said, noting his understanding of the condition. Kaplan said SBF “is capable of huge accomplishments” while noting he has “a way of interacting with people that’s unusual and sometimes off-putting.”

Kaplan agreed with prosecutors’ claim that Bankman-Fried “wanted to be a hugely, hugely politically influential person in this country,” and that that propelled his financial crimes.

L to R: Bernard Madoff, Sam Bankman-Fried, Elizabeth Holmes.

Sam Bankman-Fried’s sentence of 25 years puts him at the high end for sentence length in prominent white-collar fraud cases. He faced over 100 years in prison under federal sentencing guidelines.

Ahead of him is Bernard Madoff, who was sentenced to 150 years behind bars for the $20 billion Ponzi scheme he led — the largest financial fraud in history. He died around 12 years into his sentence.

Theranos founder and CEO Elizabeth Holmes, meanwhile, is serving a much shorter sentence than Bankman-Fried. Holmes was convicted on four charges of defrauding investors while running the failed blood-testing startup Theranos. She faced a maximum of 20 years in prison but was sentenced to a little over 11 years. She began serving her sentence in May of last year.

Her counterpart, Ramesh “Sunny” Balwani, the former COO of Theranos and ex-boyfriend of Holmes, was sentenced to nearly 13 years in prison. He also faced up to 20 years.

Assistant United States District Attorney Nicolas Roos stepping out of federal court on November 2, 2023, after a guilty verdict was reached on the fraud trial of Samuel Bankman-Fried.

After Bankman-Fried addressed the court, prosecutor Nicolas Roos offered a sobering counter-argument that FTX was “created with criminality that was pervasive throughout.”

“Sam Bankman-Fried stole over $8 billion in customer money, and I emphasize stole because it was not a liquidity crisis, or an active mismanagement, or poor oversight from the top,” Roos said. “It was not a bloodless financial loss on paper.”

Sam Bankman-Fried outside the Manhattan federal court on March 30, 2023.

Bankman-Fried told the court he’d been pained to see FTX’s customers suffer.

“It’s been excruciating to watch,” he said. “Customers don’t deserve any of that pain.”

As CEO, he was responsible for that pain, he said. But “I’m not the one that matters at the end of the day — it’s the customers and employees affected that matter.”

Seeming to acknowledge his looming prison sentence, he said: “My useful life is probably over. It’s been over for a while now.”

In a meandering statement to the court, Bankman-Fried admitted that he made “a series of bad decisions” as the CEO of FTX.

He commended his former business partners, including co-founder Gary Wang and his ex-girlfriend Caroline Ellison, both of whom testified against him in trial in compliance with their plea agreements.

Together, they all “built something beautiful,” Bankman-Fried said.

 “And I threw it all away,” he added. “It haunts me every day.”

After his lawyer spoke, Bankman-Fried addressed the court directly.

“A lot of people feel really let down, and they were very let down, and I am sorry about that.” he said. “I am sorry about what happened at every stage. And there are things I should’ve done and things I shouldn’t have.”

Former FTX CEO Sam Bankman-Fried on August 11, 2023 as he arrived for a bail hearing at Manhattan Federal Court.

Bankman-Fried’s lawyers are trying to counter the government’s narrative that the former crypto billionaire was motivated by greed and hubris.

While locked up in the Metropolitan Detention Center since August, Bankman-Fried has been tutoring fellow inmates who are pursuing their GEDs, his lawyer told the court during SBF’s sentencing hearing.

Bankman-Fried’s mother also noted in pre-sentencing letter to the court that he has also “helped two inmates who are facing close to a lifetime in prison for crimes they likely did not commit to find competent counsel prepared their case.”

She added: “The mother of one of the inmates reached out to me about three months ago to ‘ask me to pass along her gratitude to Sam, who she said has given her son a reason to live for the first time since his arrest four years ago.”

Attorney Marc Mukasey, defense lawyer for Sam Bankman-Fried, arriving for a hearing at the Manhattan Federal Courthouse in New York City on February 21.

Sam Bankman-Fried’s attorney Marc Mukasey told the court that “Sam was not a ruthless financial serial killer who set out every morning to hurt people.” 

“His real motivations were misapprehended and misunderstood,” Mukasey said. “Really he’s an awkward math nerd…He loves video games and veganism, and he’s compassionate to animals.”

Mukasey added that Bankman-Fried still believes he could’ve fixed the problem at FTX if he’d had the time.

Kaplan also said he found that Bankman-Fried committed perjury during his trial testimony. He falsely testified that he had no knowledge that Alameda had spent FTX customer deposits before the fall of 2022, the judge said.

Judge Kaplan said he found that Bankman-Fried committed witness tampering before he was remanded into custody when he communicated with the former FTX general counsel.

Judge Kaplan said he found that the loss amount to victims of Bankman-Fried’s crimes exceeds $550 million — the high end of the range given by federal sentencing guidelines. Kaplan said he found there was a loss to investors of $1.7 billion, a loss to Alameda lenders of $1.3 billion and a loss to FTX customers of $8 billion.

In their pre-sentencing memos, SBF’s lawyers argued that there was no loss to any victims, arguing that they will be made whole in the bankruptcy process. “I reject entirely that there was no actual loss,” the judge said.

To say that FTX customers and creditors will be paid in full “is misleading, it is logically flawed, it is speculative,” Kaplan said.

Still Kaplan says he intends to give Bankman-Fried a prison term below the maximum sentencing guidelines when he ultimately hands down the 32-year-old’s sentence.

A judge is not required to adhere sentencing guidelines.

Andrew Dietderich, a lawyer involved in handling the bankruptcy estate of FTX, told a Delaware judge last month that he anticipates customers will be repaid in full.

He cautioned though that “this not as a guarantee, but as an objective.”

“There is still a great amount of work and risk between us and that result, but we believe the objective is within reach and we have a strategy to achieve it,” Dietderich said.

Sam Bankman-Fried has arrived in court to await his sentencing for his role in the massive crypto fraud at FTX, the company he founded.

He was not shackled, but he held his hands behind his back as he walked in.

Bankman-Fried’s crypto trading firm’s bankruptcy, in the fall of 2022, unleashed a financial contagion in the cryptocurrency world.

Immediately following FTX’s crash, crypto exchange Gemini, which was founded by Cameron and Tyler Winklevoss, froze customer redemptions in its lending unit, citing market turmoil. Its lending unit later filed for bankruptcy.

Just a few weeks after FTX’s bankruptcy, another crypto lender, BlockFi, also went bust. The company said it had “significant exposure” to FTX and its sister firm Alameda.

Other cryptocurrency firms like Coinbase and Binance conducted significant layoffs after FTX’s downfall and the decline of the value of bitcoin and other digital currencies.

Since then, crypto markets have rebounded significantly. Bitcoin, a bellwether for the market, recently hit its all-time high of $73,750.

Sam Bankman-Fried is led into a New York court after federal prosecutors added on a 13th criminal charge against the co-founder of the crypto firm FTX on March 30, 2023 in New York City.

It seems clear that Bankman-Fried, who is appealing his conviction, will go to prison. But the length of that sentence is entirely in the hands of Judge Lewis Kaplan of the Southern District of New York.

Prosecutors have asked for 40-50 years. Lawyers for Bankman-Fried, who turned 32 this month, have pushed back, calling that a “medieval…death-in-prison sentencing recommendation.” They say a sentence of no more than six and a half years is appropriate for a non-violent first-time offender.

Kaplan will weigh those recommendations, as well as the Probation Department’s guidance — which, at 100 years, had even prosecutors deeming it unnecessarily harsh. He can also consider a range of other factors in his own assessment, including Bankman-Fried’s age and whether the judge believes the former crypto billionaire is likely to commit more crimes.

Barbara Fried and Allan Joseph Bankman, parents of FTX Co-Founder Sam Bankman-Fried, arrive at federal court on March 28, 2024 in New York City.

Sam Bankman-Fried’s parents arrived at the Manhattan court early Thursday for their son’s sentencing.

Joe Bankman and Barbara Fried are both tenured Stanford law professors and live in California. They were spotted at their son’s Manhattan trial, and featured prominently in the case.

In September, a lawsuit against Bankman and Fried claims the couple discussed with their son transferring a $10 million cash gift and a $16.4 million luxury property in the Bahamas to them, even as the company was on the verge of insolvency. 

Despite Bankman-Fried’s assertions that his parents weren’t involved in “any of the relevant parts” of FTX, the lawsuit claims that his parents played a role from the beginning.

Bankman, a renowned tax attorney, repeatedly described FTX as a “family business,” the filing states. 

It describes Bankman as having broad oversight of the company as early as 2018, both as an unofficial adviser and later as a paid employee. 

Fried, an expert in legal ethics, never held a formal position within her son’s crypto empire, but the lawsuit claims she also played a role as an adviser, particularly when it came to Bankman-Fried’s copious political contributions. She described herself as her son’s “partner in crime of the noncriminal sort,” the lawsuit claims. 

As a result of the lawsuit against Bankman and Fried, Stanford University has said it will be returning gifts it received from FTX “in their entirety.”

Sam Bankman-Fried testifying in February 2022 during a Senate Committee on Agriculture, Nutrition and Forestry hearing about "Examining Digital Assets: Risks, Regulation, and Innovation," on Capitol Hill in Washington, DC.

A year and a half ago, Sam Bankman-Fried was living in the Bahamas as a crypto superstar, running a celebrity-backed startup, surrounded by fans and friends who believed he was the real deal: an MIT math whiz. A visionary who ditched the Wall Street track to chart his own course. A philanthropist building a fortune that, he repeatedly said, he intended to give away entirely.

Bankman-Fried, known as SBF, began his career as a trader at Jane Street Capital after studying math and physics at MIT. In 2017, he left Jane Street to strike out on his own, starting a cryptocurrency hedge fund he called Alameda Research. The firm’s first office was a two-bedroom Airbnb in North Berkeley, California.

His entrepreneurial drive didn’t stop there: In 2019, Bankman-Fried co-founded cryptocurrency exchange FTX and became its CEO.

He later hired his former Jane Street colleague Caroline Ellison as a trader at Alameda. She later became the firm’s CEO and, at times, Bankman-Fried’s girlfriend. She also became the prosecution’s star witness, testifying that she and others carried out financial crimes under Bankman-Fried’s direction.

In January 2022, as cryptocurrency prices were still hovering near all-time highs, FTX was valued at $32 billion, with high-profile investors like SoftBank and BlackRock. In November 2022, the company filed for bankruptcy after experiencing billions of dollars worth of net withdrawals. 

The FTX app is seen on a phone in November 2022.

FTX, founded by Bankman-Fried in 2019, billed itself as a safe and easy way to start trading cryptocurrencies – digital assets whose values are based largely on a collective hope for their future application, which remains murky.

In the early 2020s, with US interest rates at zero and millions of amateur investors stuck at home, FTX’s popularity as a crypto portal skyrocketed. By 2022, FTX was airing Super Bowl ads and plastering its name on the Miami Heat’s arena.

But FTX collapsed into bankruptcy on November 11, 2022, after what was effectively a run on the bank – a customer panic sparked by a leaked document that suggested irregular financial dealings between FTX and another firm owned by Bankman-Fried.

But, unlike bank customers, FTX depositors had no federal insurance fund to compensate them when the cash dried up. And despite FTX’s public assurances that it didn’t invest or move customer deposits in any way, Bankman-Fried’s other firm had been secretly siphoning deposits to repay its own lenders, underwrite executives’ luxury lifestyles, gamble in crypto markets and funnel millions of dollars in US political campaigns.

In this courtroom sketch, FTX founder Sam Bankman-Fried stands as the jury foreperson reads the verdict in his fraud trial over the collapse of the bankrupt cryptocurrency exchange at federal court in New York City, on November 2, 2023.

Bankman-Fried was found guilty in November of seven federal counts of fraud and conspiracy.

Put simply, prosecutors say he not only stole from customers and deceived investors, but he also engaged his business partners in the scheme and subsequent cover-up.

In total, prosecutors say the fraud amounted to $10 billion, including $8 billion siphoned from FTX customers without their knowledge or consent.

Here’s what the seven counts mean: 

Crimes against FTX customers: Counts one, two and six

Count one: Wire fraud on customers of FTX

Count Two: Conspiracy to commit wire fraud on customers of FTX

Count Six: Conspiracy to commit commodities fraud on customers of FTX 

Fraud against lenders: Counts three, four and five 

Counts three and four: Wire fraud and conspiracy to commit wire fraud on lenders to Alameda Research 

Count Five: Conspiracy to commit securities fraud on investors in FTX 

Cover-up: Count seven

Count Seven: Conspiracy to commit money laundering