Podcast: Crypto on trial–the downfall of Sam Bankman-Fried
The Guardian’s Today in Focus recounts the spectacular rise and fall of crypto’s onetime king
See inside the courtroom at Bankman-Fried’s sentencing
Cameras and recording devices are not allowed in US federal courts, so courtroom sketch artists are commissioned to give the public a view into the proceedings. Pastels drawn at Bankman-Fried’s sentencing show him in prison garb seated with his defense counsel, judge Lewis Kaplan on the bench, a victim of FTX’s fraud testifying, and Bankman-Fried reading his own statement.
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Bankman-Fried’s parents ‘heartbroken’
Following the sentencing of Sam Bankman-Fried to 25 years in federal prison, Joseph Bankman and Barbara Fried said in a joint statement, “We are heartbroken and will continue to fight for our son.”
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Closing summary
Sam Bankman-Fried, former CEO of cryptocurrency exchange FTX, was sentenced to 25 years in prison for crimes of fraud and conspiracy. Judge Lewis Kaplan issued the sentence in a Manhattan courtroom on Thursday, declaring that the former billionaire committed a “very serious crime” and lacked remorse.
Bankman-Fried arrived in the courtroom just after 9:40am in the morning, wearing a khaki prison jumpsuit. His hair, previously cut short for his trial, had grown back to the messy style he was known for while head of FTX. He once said that the trademark cloud above his head was good for business.
Judge Lewis Kaplan opened the hearing by going through sentencing guidelines, stating that he rejected the defense’s argument that there “was no loss” as a result of the fraud at FTX.
Kaplan also rejected Bankman-Fried’s argument that customers could be paid back. Kaplan compared the former billionaire to “a thief who takes his loot to Las Vegas,” saying that Bankman-Fried was not entitled to leniency by trying to use his winning to pay back what he stole.
Kaplan stated that Bankman-Fried committed perjury numerous times during his testimony in the trial, listing three specific occasions but saying that there were many more he could have added.
Bankman-Fried sat slumped in his chair during the sentencing, occasionally conferring with his lawyers or crossing his arms.
One victim of FTX’s fraud who flew in from London gave a statement to the court, saying that he “suffered every day” as a result of Bankman-Fried’s actions.
Bankman-Fried’s defense attorney, Marc Mukasey, argued that his client never intended to commit harm and “doesn’t make decisions with malice in his heart”. He described Bankman-Fried as an “awkward math nerd” who loves video games and animals, saying that comparisons to criminals such as Bernie Madoff were false. Mukasey mounted a similar defense during Bankman-Fried’s trial.
Much of Mukasey’s statement focused on Bankman-Fried’s philanthropy, and painted the former crypto mogul as a sensitive, misunderstood figure who struggled with depression and social awkwardness. He described Bankman-Fried as “a beautiful puzzle”.
Bankman-Fried stood to deliver his own statement during the sentencing, awkwardly apologizing for the fall of FTX by saying “sorry about what happened”. He claimed that he made “a series of bad decisions” that ruined the work of his cherished employees and colleagues, name-checking co-founder Gary Wang and his former girlfriend Caroline Ellison – both of whom testified against him.
Bankman-Fried painted the fall of FTX as “mismanagement” and veered into what he saw as issues around the handling of its bankruptcy. He held onto opposite elbows, fumbling over his words at times while saying he wanted to help customers get paid for their losses.
The government prosecutor gave a statement rejecting Bankman-Fried’s apology, saying that there was no remorse for his crimes or real acknowledgement of the harm he committed. The judge agreed.
The prosecutor detailed cases of victims such as an elderly couple who lost their life savings and a 23-year-old man in a Morocco with a disabled father who trusted FTX with his funds.
Before reading his sentence, Judge Kaplan gave a statement that noted Bankman-Fried came from an “exceptionally privileged background” and was extremely intelligent. He also acknowledged that Bankman-Fried has autism and said he took his condition and social awkwardness into account in the sentencing.
Kaplan stated that Bankman-Fried wanted political and financial power and influence, and was willing to take any chances to get it. He declared that Bankman-Fried was aware what he was doing was wrong, and was always calculating the probability of getting away with his crimes.
The judge cited Caroline Ellison’s testimony that Bankman-Fried was willing to take risks if the “expected value” calculation was in his favor, even if it meant risking extreme harm. He also chastised Bankman-Fried for a lack of remorse and “evasive, hair-splitting” testimony during the trial.
Kaplan sentenced Bankman-Fried to 25 years in prison, with three years of supervised release afterward. He recommended a medium-security correctional facility somewhere in the Bay Area, and gave a period of time for the former billionaire to appeal his sentence.
Bankman-Fried made little reaction as the sentence was read.
Attorney who prosecuted Sam Bankman-Fried calls Bankman-Fried a crook and a liar, says 25-year sentence sends “an important message”
US federal prosecutor Damian Williams issued a statement Thursday after Sam Bankman-Fried was sentenced to 25 years in prison. Williams criticized Bankman-Fried and praised Judge Lewis Kaplan, saying that two-and-a-half decades of prison time will “prevent the defendant from ever again committing fraud”.
“Samuel Bankman-Fried orchestrated one of the largest financial frauds in history, stealing over $8bn of his customers’ money. His deliberate and ongoing lies demonstrated a brazen disregard for customers’ expectations and disrespect for the rule of law, all so that he could secretly use his customers’ money to expand his own power and influence. The scale of his crimes is measured not just by the amount of money that was stolen, but by the extradordinary harm caused to victims, who in some cases had their life savings wiped out overnight. As a result of his unprecedented fraud, Bankman-Fried faces 25 years in prison and forfeiture of over $11bn. Today’s 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 creims that justice will be swift, and the consequences will be severe,” Williams wrote.
Sam Bankman-Fried will appeal his 25-year sentence
Bankman-Fried’s lawyer said a month ago that the disgraced crypto mogul would file an appeal to fight his conviction and sentencing on seven counts of wire fraud and conspiracy to launder money. The attorney reiterated his point Thursday.
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In addition to serving a 25-year sentence, Sam Bankman-Fried will also have to forfeit $11bn in assets, the judge said Thursday. The ex-CEO of FTX has the right to appeal his sentence but not the right to parole, as he was convicted of federal crimes.
Has the crypto industry reformed since the collapse of FTX?
In a piece for Guardian Opinion, Molly White, author of the newsletter Web3 Is Going Great, argues, “Since Bankman-Fried’s conviction, there have been no changes that would prevent a new crypto mania just as devastating as the last.
“With no changes to how the industry operates and no watchdogs to check the abuse and greed that have defined it over its now-15 years of existence, we are doomed to see history repeat itself,” she writes.
Yesha Yadav, professor and Associate Dean at Vanderbilt law school, agreed. She said, “Some of the loudest voices pushing for a very long sentence have been in the crypto industry. There is a desire to move on and close the chapter on SBF and the era he represents. But it will take a lot more work. As shown by this trial, his shadow is going to cast a very long legacy over the industry. The trial coverage has been extremely public. His fall from grace could not have been more sharp. Without a real systematic effort to engage in regulatory reform, and to institutionalize high standards, there may be challenges for the industry to shrug off the SBF legacy (and that of others like Binance’s Changpeng Zhao) and move into a more mainstream and widely trusted ecosystem.”
Read more from White’s essay:
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Legal experts offer assessments of Bankman-Fried’s sentence
Carl Tobias, chair of the University of Richmond Law School, said, “Judge Kaplan’s imposition of punishment was careful and appropriate, as you would expect from a highly experienced Southern District of NY jurist. The 25-year sentence was closer to what the government recommended than what defense counsel suggested. That sentence and the requirement that SBF repay $11 billion should deter SBF and many others who might be inclined to engage in behavior similar to SBF’s that they will be swiftly prosecuted and severely punished, should they choose to do so.”
Gia Weisdorn, professor of practice in business law for Pepperdine Graziadio Business School, said, “This sentence fell somewhere between the various sentencing recommendations. While SBF faced up to 110 years in prison, prosecutors, the federal probation department, and the defense differed markedly on their proposed length of his sentence, with prosecutors recommending 40-50 years, the probation department recommending 100 years, and SBF’s defense requested a maximum of 6.5 years citing mitigating factors.”
Yesha Yadav, professor and Associate Dean at Vanderbilt law school, said, “The sentence today is very much line with expectations – it is clearly designed to deter, underscore the severity of the crimes, while perhaps also being mindful of SBF’s youth and the chance for some rehabilitation going forward. The judge did not buy what SBF was selling today – the apologies came too late to convince the judge who no doubt remembered the highly evasive and self-righteous courtroom behavior at trial and the lack of remorse most of all. The judge seemed to believe that SBF would do this again were he given the chance. 25 years makes sure that there is no chance for him to try his hand at finance during his most productive working years.”
Yadav concurred with the judge’s assessment of Bankman-Fried’s contention that there would, ultimately, be no harm to FTX customers.
“I was stunned by the tone of the defense’s submissions arguing that no harm had come to the public because the bankruptcy would deliver recoveries. First, that is not entirely true. A lot of people will not get the benefit of the upswing. Secondly, it came across as extremely callous in ignoring the emotional harm and financial pain felt by customers over the last two years. Many companies are now gone following the FTX collapse, investors and lenders have lost around $4 billion. So, I am not surprised that the judge put a great deal of weight on the speciousness of this argument and the need to deter others from this kind of criminal and careless behavior.”
Joseph Kotrie-Monson, criminal defence lawyer and cyber crime specialist at Mary Monson said, “25 years does not sound like a lenient sentence, but make no mistake; this was the worst Ponzi scheme upon both large scale and small investors of modern times. Many of Sam Bankman-Fried’s victims were vulnerable, inexperienced investors, who lost life savings. Bankman-Fried’s dishonest conduct and gaslighting of his victims up to his trial and eventual conviction, would have been regarded by Judge Michael Kaplan as substantially aggravating. His defence attorney sought to persuade the court that his sentence should be reduced on the basis that Sam Bankman-Fried was ‘brilliant, complex and humane.’ The jury, however, had already found that Bankman-Fried had used this image to conceal his motives and methods in defrauding investors. This all meant that the judge had little sympathy for the idea of the so-called ‘effective altruist’ being given an easy ride.”
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Bankman-Fried sentence lower than 40-50 years prosecutors asked for
Sam Bankman-Fried faced a maximum sentence of 110 years. Prosecutors asked for 40 to 50. Bankman-Fried’s lawyers asked for six. He got 25.
In advance of Sam Bankman-Fried’s sentencing Thursday, federal prosecutors requested that the ex-mogul, age 32, be sentenced to four or five decades in prison. They argued that the risk of him committing fraud again was too great to allow him lenience.
Bankman-Fried’s lawyers asked for a light sentence, saying that he was a first-time, nonviolent offender. They also argued that FTX’s customers would be paid back in full. The judge roundly rejected the second argument, pointing out that FTX’s customers lost $8bn. FTX’s current CEO has made the same assessment as the judge in court filings.
On Thursday, judge Lewis Kaplan sentenced Bankman-Fried to 25-years in prison.
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Judge blasts Bankman-Fried as remorseless and evasive as he hands down 25-year sentence
Before reading the sentencing, Judge Kaplan stated that “this was a very serious crime” and chastised Bankman-Fried for “evasive, hairsplitting” testimony during the trial.
“Never seen a performance quite like that,” Kaplan said.
Kaplan stated that Bankman-Fried’s persistence and marketing abilities meant that it was “not a trivial risk” he would commit wrongdoing again in the future.
He said that, though Bankman-Fried said the word “sorry”, Bankman-Fried “never a word of remorse for the commission of terrible crimes”.
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Sam Bankman-Fried sentenced to 25 years
Sam Bankman-Fried has been sentenced to 25 years in prison for masterminding the $8bn fraud that led to the collapse of cryptocurrency exchange FTX. He was found guilty on seven charges of wire fraud and conspiracy in November 2023.
Sam Bankman-Fried said Thursday that FTX’s customers “could have been paid back. There were enough assets. There are enough assets”. He has made a similar argument in court filings leading up the trial that the bankrupt exchange held enough cryptocurrency that it could have repaid its account holders, who lost nearly $8bn when it shuttered.
Earlier in the hearing, Judge Lewis Kaplan rejected this argument, saying Bankman-Fried still committed fraud by using his customers’ assets for his own ends.
“A thief who takes his loot to Las Vegas and successfully bets the stolen money is not entitled to a discount on the sentence by using his Las Vegas winnings to pay back what he stole,” Kaplan said. The current CEO , has also rejected Bankman-Fried’s argument.
Bitcoin’s price has skyrocketed since the collapse of FTX in November 2022, cresting $70,000 in recent weeks. Much of the cryptocurrency held by FTX is in bitcoin.
Judge Lewis Kaplan said Sam Bankman-Fried’s claim that FTX’s customers will get their money back “is misleading, it is logically flawed, it is speculative.” He said that this argument for leniency did not hold water. He said he did not plan to impose the maximum sentence of 110 years, though.
Lawyers for Bankman-Fried have has said that the exchange has the assets to make its customers whole. Bankman-Fried has claimed “the harm to customers, lenders and investors is zero”.
FTX’s caretaker CEO has called this declaration “categorically, callously, and demonstrably false”. John Ray III said Bankman-Fried was living a “life of delusion”.
Kaplan said that Bankman-Fried’s crimes had cost his victims $550m and that, overall, FTX customers lost $8bn and that its investors lost $1.7bn.
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'I am sorry': Sam Bankman-Fried apologizes in court before sentencing
Bankman-Fried told the court Thursday morning, “I am sorry”. Previously, Bankman-Fried had expressed little contrition for his role in what happened at FTX. He maintained throughout his trial that he had not committed fraud. On Thursday, however, he said he made “a series of bad decisions” that “haunts me every day”.
“A lot of people feel really let down, and they were very let down, and I am sorry about that. I am sorry about what happened at every stage,” he said. “My useful life is probably over”.
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Judge says Sam Bankman-Fried committed witness tampering and perjury in addition to fraud
Judge Lewis Kaplan said at the start of the hearing that Sam Bankman-Fried had committed crimes during and after his trial in addition to the wire fraud and conspiracy to launder money the 32-year-old was convicted of.
Kaplan said Bankman-Fried communicated with FTX’s former general counsel before the ex-CEO was remanded into custody. Bankman-Fried’s bail was revoked before his trial after the diary of his ex-girlfriend, Alameda Research CEO Caroline Ellison, leaked to The New York Times. Bankman-Fried also committed perjury while testifying, Kaplan said, when Bankman-Fried said that he had not known that Alameda Research, a hedge fund closely tied to FTX, was spending FTX customer deposits for its own ends.
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Sam Bankman-Fried’s parents are in the courtroom to witness their son’s sentencing.
Joseph Bankman and Barbara Fried are both law professors at Stanford University, the former of tax law and the latter of legal ethics. Bankman-Fried said they were not involved in “any of the relevant parts” of FTX’s operation.
A lawsuit filed by the company itself last year alleges, however, that the pair helped themselves to millions of dollars for their own “pet causes” and personal enrichment. The company says it aims to recover the money that the two professors received from the company. Discussions between Bankman, Fried and their son included emails in which the father whined to his son for a higher salary, per the suit. Bankman and Fried have called the lawsuit’s allegations “completely false”.
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Kraken blasts FTX despite its own problems
A rival cryptocurrency exchange has taken aim at the now-bankrupt FTX and its disgraced former CEO Sam Bankman-Fried. Kraken, which allows trades of multiple kinds of cryptocurrency and is valued at nearly $11bn, said in a statement Thursday: “Sam Bankman-Fried founded his empire on false promises and stolen client funds. SBF now faces consequences, but this does not undo the immense harm he has caused to millions of people and the crypto industry. Good crypto actors must set the tone by improving education, calling out bad actors, and adhering to crypto’s founding principles of personal ownership and public verifiability.”
Despite lumping itself in with the “good crypto actors,” Kraken has faced its own share of legal controversies. In November 2023, the US Securities and Exchange Commission sued the company for allegedly operating as a securities exchange without registering. Kraken was also accused of using customer funds to pay its own expenses, the very thing that got Bankman-Fried convicted of fraud. In February 2023, the company agreed to halt the operation of its staking service as part of a settlement with the SEC over alleged unregistered sales of securities.
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Bankman-Fried sentencing hearing under way in Manhattan
Sam Bankman-Fried’s sentencing hearing has begun in Manhattan federal court before Judge Lewis Kaplan.
Facing more than 100 years in prison, though prosecutors have asked for 40-50 and his own attorneys have asked for just six, he has been detained in Brooklyn since his trial in November. The former CEO is in the courthouse.
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Timeline: the rise and fall of Sam Bankman-Fried
(May 8, 2019) Founding FTX
Sam Bankman-Fried, along with former Google employee Gary Wang, found the crypto exchange FTX. Bankman-Fried is in his 20s and had just left the trading firm Jane Street Capital.
(November 11, 2019) FTX receives $100m investment
Cryptocurrency exchange Binance's then CEO Changpeng Zhao invests $100m in FTX in exchange for 20% of the company.
(September 1, 2021) Bankman-Fried and FTX move to the Bahamas
Bankman-Fried relocates the firm's headquarters from Hong Kong to the Bahamas in 2021, buying up millions in real estate and setting up residence in the nation.
(August 1, 2021) Partnerships and big investments
Bankman-Fried and FTX strike a deal on the company's first big partnership, reaching a sponsorship deal with Mercedes' Formula One racing team. Meanwhile, FTX raises hundreds of millions in a funding round and is valued at $25bn.
(January 1, 2022) FTX valuation swells to $32bn
Bankman-Fried raises a $400m in a Series C financing round, as the company's valuation balloons to $32bn.
(February 1, 2022) FTX launches Super Bowl ad
Bankman-Fried pours millions of dollars into a Super Bowl ad featuring Larry David, as FTX makes a bid for the mainstream.
(April 26, 2022) Crypto Bahamas puts SBF in the spotlight
FTX holds an event called Crypto Bahamas, featuring celebrities like Gisele Bündchen and Tom Brady. Bankman-Fried appears on stage with former world leaders Bill Clinton and Tony Blair.
(October 1, 2022) Sam Bankman-Fried the campaign donor
Bankman-Fried puts around $40m into backing various political campaigns, becoming an emerging power player in Washington.
(November 2, 2022) Reports emerge of FTX's shaky finances
Cryptocurrency news site CoinDesk publishes a story showing that FTX's finances may be shakier than previously known, leading to a surge of media coverage and concern from investors. A customer run on deposits leads to crisis at the exchange.
(November 11, 2022) Bankman-Fried resigns and FTX goes bankrupt
Bankman-Fried resigns after a week of chaos and missing funds.
(November 1, 2022) Bankman-Fried arrested
Authorities arrest Bankman-Fried in the Bahamas and he is extradited to the US. He is charged with conspiracy and fraud.
(August 1, 2023) Bail revoked, sent to jail
Bankman-Fried's bail is revoked after the diary of his former FTX executive Caroline Ellison leaks to the New York Times. He is sent to jail awaiting trial.
(October 1, 2023) Trial begins
Criminal trial begins in Manhattan federal court, with former close allies and FTX executives testifying against Bankman-Fried.
(November 1, 2023) Bankman-Fried found guilty
A jury finds Bankman-Fried guilty on all seven charges of conspiracy and wire fraud. He faces potential decades in prison.
(March 28, 2024) Bankman-Fried sentenced to 25 years
In Manhattan federal court, Sam Bankman-Fried was sentenced to 25 years in prison and ordered to forfeit $11bn in assets
How did we get here? FTX’s collapse and Sam Bankman-Fried’s trial
FTX imploded in November 2022 after Bankman-Fried and those in his inner circle comingled funds from the exchange with a closely associated hedge fund, Alameda Research. The result was Bankman-Fried and others using their customers’ money for their own personal ends. The illegal mixture created an $8bn budget shortfall that, when enough customers asked to withdraw their cryptocurrency, brought the exchange crashing down.
Bankman-Fried maintained his innocence throughout a month-long trial last year. Prosecutors said that the CEO “misappropriated and embezzled” billions of dollars in his management of FTX. He was convicted in November on seven counts of wire fraud and conspiracy to launder money.
Bankman-Fried continues to contend that any mistakes he made have solutions within easy reach, writing in a February bankruptcy filing that FTX’s “harm to customers, lenders and investors is zero” because “the money was there – not lost”.
The CEO appointed to oversee FTX’s complex bankruptcy, John Ray, has lambasted Bankman-Fried’s conduct during the trial and its aftermath. He called Bankman-Fried’s recent statements “demonstrably false”.
“Mr Bankman-Fried continues to live a life of delusion. The ‘business’ he left on 11 November 2022 was neither solvent nor safe,” Ray wrote in a 20 March court filing. Ray said Bankman-Fried lavished company funds on “luxury homes, private jets, and overpriced speculative ventures”.
“Customers will never be in the same position they would have had they not crossed paths with Mr Bankman-Fried and his so-called brand of ‘altruism’,” Ray wrote.
Bankman-Fried’s inner circle lived with him in a $35m, 12,000 sq ft penthouse overlooking a yacht marina in the Bahamas while they ran the company together.
In a stark reversal of fortune, though, several members of FTX’s top brass testified against him during his trial. Caroline Ellison, his on-again, off-again girlfriend of several years and the CEO of Alameda Research, served as the prosecution’s star witness. She confessed to committing fraud and said on the stand that she had done so repeatedly at Bankman-Fried’s direction. She made a deal with prosecutors to plead guilty to seven counts of wire fraud, securities fraud and money laundering.
‘Old-fashioned embezzlement’: where did all of FTX’s money go?
Sam Bankman-Fried oversaw its collapse – now the crypto firm is in bankruptcy proceedings as contentious as his fraud trial
The rise and fall of Sam Bankman-Fried: an unrepentant ex-mogul faces down decades in prison
The former CEO of FTX, once a king of cryptocurrency, saw a swift reversal of his fortunes starting in November 2022.
Sam Bankman-Fried requested a six-year sentence
Sam Bankman-Fried’s lawyer said in late February that the suggested 100-year prison sentence for the FTX founder would be “grotesque” and “barbaric” and at most a term of a few years behind bars would be appropriate for crimes that the disgraced cryptocurrency mogul still disputes.
In pre-sentencing arguments filed just minutes before deadline in Manhattan federal court, attorney Marc Mukasey said a report by probation officers improperly calculated federal sentencing guidelines to recommend a sentence just 10 years short of the maximum potential 110-year sentence. Bankman-Fried, known for his casual clothing and wild hair, was convicted of seven counts of wire fraud and conspiracy to launder money in November 2023.
A proper sentence, Mukasey said, would be based on guidelines that would call for between five and six and a half years in prison, at most.
“Sam is not the ‘evil genius’ depicted in the media or the greedy villain described at trial,” Mukasey wrote. “Sam is a first-time, non-violent offender, who was joined in the conduct at issue by at least four other culpable individuals, in a matter where victims are poised to recover – were always poised to recover – a hundred cents on the dollar.”
US prosecutors petitioned for Sam Bankman-Fried to be sentenced to 40-50 years in prison
In mid-March, federal prosecutors requested that judge Lewis Kaplan sentence Bankman-Fried to at least four decades in prison. The maximum penalty he could face would amount to more than 100 years.
“His life in recent years has been one of unmatched greed and hubris; of ambition and rationalization; and courting risk and gambling repeatedly with other people’s money,” the US attorneys in Manhattan wrote. “And even now Bankman-Fried refuses to admit what he did was wrong.”
Sam Bankman-Fried to be sentenced in Manhattan federal court, faces over 100 years in prison
Sam Bankman-Fried, once the CEO of FTX and a billionaire wunderkind of the cryptocurrency world, will be sentenced to prison Thursday morning in New York City. He was convicted on seven counts of wire fraud and conspiracy to launder money in November.
Should the judge in his case impose the harshest penalty allowed, the 32-year-old would face more than 100 years and die an incarcerated man, a possibility his lawyer has called “grotesque”.
In advance of the hearing, lawyers for the US Department of Justice and for Bankman-Fried have engaged in bitter back-and-forth over how long of a prison sentence would be appropriate. His lawyers have argued for a minimal sentence of just six years. Prosecutors are advocating for 40-50 years for his “unmatched greed and hubris” in perpetrating the $8bn (£6.3bn) fraud.
Sam Bankman-Fried deserves 40 to 50 years for FTX fraud, prosecutors say.
