SBF Sentenced to 25 Years in Prison for FTX Fraud

FTX founder and former CEO Sam Bankman-Fried was sentenced to 25 years in prison on Thursday, condemned to 300 months behind bars 15 months after the collapse of his exchange.

“I threw away what they had built,” he said of FTX employees in court. “They were let down. I'm sorry about that. I'm sorry about what happened at every stage.”

Southern District of New York Judge Lewis Kaplan’s decision represented the culmination of Bankman-Fried’s arc, who swiftly went from industry darling to one of crypto’s most infamous faces. The former crypto mogul was convicted of seven criminal charges last year, including money laundering and fraud, after his month-long trial laid FTX’s mismanagement bare.

“A man willing to flip a coin as to the continued existence of life on earth, Mr. Bankman-Fried knew that Alameda was spending customer funds on risky investments, political contributions and Bahamas real estate,” Judge Kaplan said. “His name is mud around the world.”

Though he apologized for tarnishing a company that others had once helped build, Bankman-Fried maintained his crumbled crypto empire could’ve persevered on Thursday. He claimed that neither FTX nor his trading firm Alameda Research were really bankrupt at the time they both were shut down in November 2022. It was “an unpleasant few weeks,” he said.

“If Mr. Bankman Fried thought the mathematics would justify it, he’d do it again,” Assistant U.S. Attorney Nicolas Roos said of the crimes committed, describing Bankman-Fried’s comments as showing “no acceptance of responsibility.” 

In delivering Bankman-Fried’s sentence, Kaplan appeared to agree and said, “There is a risk that this man will be in a position to do something very bad in the future - and not a trivial risk.”

Once known for his down-to-earth image and tousled head of hair, Bankman-Fried wore a light brown jail uniform to court on Thursday. And before delivering his sentence, Judge Kaplan pushed back against the notion that FTX’s victims faced minimal harm because FTX’s bankruptcy estate plans on repaying creditors and customers in full.

“A fortuitous run-up in the value of some cryptocurrencies bears no relation to the gravity of the crimes that were committed,” Judge Kaplan said. “A thief who takes his loot to Las Vegas and successfully bets is not entitled to a sentencing reduction, even if pay[ed]-back.”

Additionally, Judge Kaplan found that Bankman-Fried committed perjury three times at trial. The former crypto mogul willfully misled the court, he said, in testimony about his knowledge of Alameda spending FTX customer funds, when he knew FTX had an $8 billion hole, and the need to borrow more funds from FTX to repay Alameda’s lenders in October 2022.

In the run-up to his sentencing, government prosecutors and Bankman-Fried’s lawyers made dueling suggestions on his sentence’s potential length, with prosecutors urging a “necessary” 40-50 years, and his defense asking for a term of no more than 6.5 years. Technically, Bankman-Fried could’ve been handed down a prison sentence of up to 110 years.

Bolstering its sentencing suggestion, the government published dozens of materials showcasing the impact of FTX’s collapse on victims across the globe. That included direct messages Bankman-Fried received from desperate FTX customers on X after its collapse, and letters from victims sent from the government detailing guilt, shame, and the financial ruin that followed.

FTX victim Sunil Kavuri spoke about three suicides resulting from the collapse of FTX at the hearing, deriding claims that FTX customers and creditors will repaid in full as a “false.” In FTX’s bankruptcy proceedings, customers are set to be paid back in cash for the crypto they lost, which was valued at the time of FTX’s bankruptcy — with crypto markets deep in the doldrums.

At the same time, letters in support of Bankman-Fried detailed an individual with much of their life ahead of them, who displayed positive characteristics through his commitments to veganism and effective altruism. Prison would put Bankman-Fried in “extreme danger,” his mother said in a letter, claiming his diagnosis with autism spectrum disorder makes him uniquely vulnerable. 

“Sam was not a ruthless financial serial killer,” Bankman-Fried’s lawyer Marc Mukasey said at the hearing. “He did not want to personally inflict pain on anyone in any way … He makes decisions with math in his head, not malice in his heart.”

At the height of his crypto empire, Bankman-Fried’s net worth was reportedly $26.5 billion. And swooping in to invest in embattled crypto companies as the crypto market skid in 2022, the one-time wunderkind drew comparisons to Warren Buffet. However, his name is often invoked in relation to other business figures these days, such as Elizabeth Holmes and Bernie Madoff.

While FTX grew into one of crypto’s largest exchanges, the one-time CEO promoted crypto as revolutionary tech in conversations with celebrity backers or Super Bowl ads. In reality, a jury found that Bankman-Fried treated FTX as a personal piggy bank, siphoning billions of dollars from customers to spend lavishly on real estate, business investments, and political donations.

In an interview with Coinage, Marc Litt, the former U.S. prosecutor that took down Madoff, said Bankman-Fried would likely receive a sentence of 25-35 years. He argued that the 32-year-old didn’t deserve to spend “the rest of his life in jail,” and a 110-year sentence was far too long.

According to the crypto-based prediction market Polymarket, a prison sentence of 20-30 years was the most likely outcome from Bankman-Fried, with traders pencling in a 34% chance. Offchain, Crypto Twitter was abuzz with influencers and journalists posting photos outside the Southern District of New York’s courthouse where Bankman-Fried’s sentence was delivered.

Meanwhile, another high-profile crypto case played out in Manhattan on Thursday — with a jury selected just a few days ago. Facing civil charges from the Securities and Exchange Commission, lawyers for Terraform Labs and its co-founder Do Kwon fought against accusations of fraud, with echoes of Bankman-Fried’s case reflected in opening arguments.