Inside the Courtroom Where SBF Was Sentenced to 25 Years

FTX founder Sam Bankman-Fried rose to be the richest billionaire at his age in just a few years. It would take him just one more year to see his entire empire collapse – leading to his conviction on all seven counts, including fraud.

I had first met Sam at a crypto conference just three years ago, and now as I sat there watching in the very same courtroom where it all played out, I could hardly believe we were about to hear how long he’d be in prison.

After about two hours of back-and-forth in which both sides pleaded for 6 years, or 50 years, respectively, Judge Kaplan delivered his ruling: 25 years, and Sam would have to pay more than $11 billion in restitution.

Before we get there – let me describe what led up to what is now the longest white collar sentence for anyone of SBF’s age. (Funnily enough, Judge Kaplan gave him credit for that, too.)

Some people have called SBF’s 25-year sentence a light one, which I suppose could be true if you’re just going off the size of fraud – but that would negate almost everything that happened in the courtroom (and the fact that Bernie Madoff’s own prosecutor advocated for a sentence below 30 years.)

The sentencing kicked off a little late, with Sam walking in wearing a beige prison jumpsuit just before the scheduled time of 9:30 AM. Judge Kaplan then made sure everyone had the appropriate time to prepare and whether or not Sam understood the pre-sentencing points.

“Yes, your honor,” he said in a voice that sounded as usual as ever.

Judge Kaplan went back and forth with both sides on issues that weren’t really disputed to tally up all the sentencing points that would total to a final number that would dictate Sam’s sentence. The only issue of real dispute was how much harm was caused by Sam’s scheme. In this case, how much did victims lose?

Sam’s defense team had estimated that number to be $0 since the FTX estate has predicted customers should get their money back. The prosecution estimated that number to be in the billions and only short of Madoff’s $13 billion.

Judge Kaplan sided with the government, totaling the fraud at $11 billion in losses to investors, lenders, and customers. Adding in all the points, Judge Kaplan noted that the total would usually guide toward life in prison – but SBF’s max sentence was 110 years.

“Accordingly, the total base offense level is 60. Under the sentencing guidelines, once you cross 43, the adjusted offense level is adjusted back to 43. The guideline imprisonment range is life in prison. Since that would exceed the statutory maximum, the maximum possible sentence in this case is 1320 months,” he said.

At that point, it was up to the defense team to try and convince Judge Kaplan to go easy on Sam, and they (clearly) did a pretty phenomenal job. Defense attorney Marc Mukasey noted that Sam is autistic and therefore thinks in numbers.

"Sam does not make decisions with his heart, he makes decisions with math in his head,” he said. It was therefore not the case that Sam was trying to steal or defraud anyone, but merely misreading the numbers. (That point would come back to bite them in the end.)

Where Mukasey did its best work, though, was to pick a case that both he and Judge Kaplan had familiarity with to try and compare the prison time at hand with another case.

Mukasey brought up the case of Stefan Irving, a 56-year-old Brooklyn pediatrician who received a sentence of 21 years for abusing children and had traveling to Mexico for sex with a minor.

Compared with that case and that sentence, Mukasey pleaded with Judge Kaplan to see that SBF is not a monster. “We ask that you sentence Sam today, Judge, with an open mind and a compassionate heart,” he said.

Sam then took the podium to ramble for about 25 minutes in which he continued to maintain that FTX always had funds to pay people, while hoping the estate pays customers what they are owed. It wasn’t scripted, and it did Sam no favors. (If anything, it likely hurt him – which is somewhat this case in a nutshell.)

"It haunts me everyday. I made a series of bad decisions,” Sam said, while also expressing his hope that a former co-worker could keep the dream alive. “I guess there is a big opportunity in the world to do what the world thought I would do, what it hoped I would do, at least for a while, what I hoped I would do for the world, not what I ended up doing.”

Next, the prosecution took the podium to note that they never called Sam a monster – but doubled down on the idea that he is cool and calculating. As a person who could invent a scheme that grew so large so fast, he’d likely do it again if not held in prison for a substantial period of time

“If Mr. Bankman Fried thought the mathematics would justify it, he’d do it again,” prosecutor Nicolas Roos said.

That rebuttal to the defense’s point on SBF being a math wizard became the crux of Judge Kaplan’s ruling. Because he’s so bright and ambitious, Judge Kaplan said, “there is 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.”

As such, he needed to land on a sentence that would be serious enough as to still deter both Sam and others from attempting the same type of scheme again. He also paired both the defense’s depiction of Sam and the prosecution’s depiction of Sam with a depiction of his own that put a ribbon on the whole trial beautifully. He cited the testimony of Sam’s ex-girlfriend and former head of Sam’s trading firm Alameda Research that characterized Sam’s attitude on risk taking.

“At the end of the day, I keep going back to Ms. Ellison's testimony," Judge Kaplan said, citing stories Ellison had provided about Sam’s betting mentality. “I am going to read you something else that Caroline Ellison said…

Q. During your time working with the defendant, how, if at all, did he describe his approach to risk taking?

A. He described himself as truly risk neutral, meaning that most people are risk averse, meaning that they would rather not take a risk if they don't have to, or they try to avoid risks. But he said that he was totally comfortable taking a risk as long as he thought it was a positive EV, EV meaning expected value.”

Judge Kaplan characterized that as core to why Sam committed the fraud at FTX.

“In the head of this mathematical wizard, his own counsel tells us, in substance, that he was viewing the cost of getting caught, discounted by probability or improbability, against the gain of getting away without getting caught, given the probabilities. That was the game. It started at least as early as Jane Street and it continued to the very end. It's his nature.”

Given that the very last conversation I had with Sam while he was under house arrest at his parents’ home was centered on the expected value of going to trial versus taking a hypothetical plea deal, I would say Judge Kaplan nailed it.

But was 25 years the right sentence? Kaplan further opined:

“At the end of the day, the criminal justice system in this country or any country can enjoy the support of the population, which is essential to its functioning in more ways than I could describe,” he said. “Only if on the whole people think it works fairly that guilty people get their just deserves, that innocent people aren't wrongly convicted, and that they can get their arms around the case as they hear about it, and say, ‘Well, I might have decided that a little differently, but sounds reasonable, sounds fair.’ That's what we depend on. If that's not happening, we're back to trial by combat, folks, or something like it. And so, the judgment has to adequately reflect the seriousness of the crime, and this was a very serious crime.”

Judge Kaplan then approached his final ruling, which can only be described as somewhat of a plot twist given the max sentence we had opened with.

“I've concluded that the sentences recommended by the probation department and the government would be substantially greater than is necessary… I'm not saying that the defendant didn't commit very serious crimes, I am not diminishing in any way the enormous harm that he did, the brazenness of his actions, his exceptional flexibility with the truth, his apparent lack of any real remorse, and the need to deter others engaging in comparable behavior.”

Judge Kaplan even complimented Sam on how he made prosecutors re-word questions on the stand, how he gave semi-answers to make himself look better, and dodging questions altogether.

“I've been doing this job for close to 30 years. I've never seen a performance quite like that,” he said.

Judge Kaplan then read his final ruling. In the end, SBF got 25 years (though he’ll likely serve less) and will be held in a prison close to San Francisco.

Just a few floors down from the courtroom I was in, the head of another $40 billion crypto implosion was on Day Four of his trial against the SEC.

Just another day in crypto.

Watch our full dissection of SBF's defense with Bernie Madoff's former prosecutor Marc Litt. To support our community-owned outlet, own it with us, and unlock exclusive benefits, mint one of our Membership Passes today! Chat with Coinage in our Discord.

Disclosure: Alameda Ventures is one investor among many in Trustless Media, the production company behind Coinage.