Today Sam Bankman-Fried (commonly known as SBF), former CEO and founder of the collapsed cryptocurrency exchange FTX, was sentenced to 25 years in prison in the US following his conviction last year on 7 counts of fraud and conspiracy.
Judge Kaplan said during sentencing the:
He knew it was wrong. He knew it was criminal.
SBF gave an apology saying:
A lot of people feel really let down, and they were very let down ... I’m sorry about that. I’m sorry about what happened at every stage
The 31-year-old former billionaire was convicted last year on two counts of fraud and five counts of conspiracy related to the failure of FTX in November 2022, after an USD$8 billion hole was uncovered in its balance sheet. With his lieutenants, Caroline Ellison, Gary Want, and Nishad Singh, who were all his friends (and in Ms Ellison's case a sometimes romantic partner) testifying against him, and the evidence drawing damning instances of falsehoods presented to customers, the outcome of his conviction was not at all unexpected.
The sentence of 25 years in prison is at the lower end of betting platform Polymarket which showed popular opinion of convicted 20 to 40 years.
This sentence arrives about 17 months after FTX filed for bankruptcy, leading to a rapid corporate collapse that shocked financial markets and erased Bankman-Fried's estimated USD$26 billion personal fortune.
The collapse and subsequent fraud case has been swift:
FTX collapsed in November 2022, after a leak suggested a hole in customer funds and a challenge to the exchange token by a competitor;
SBF was arrested in the Bahamas in December 2022 after criminal charges were filed against him in the Southern District of New York;
SBF was extradited to the US and put on bail. He also faced additional charges brought by the US Department of Justice;
In March 2023, FTX's bankruptcy team led by veteran John Ray revealed that SBF has received USD$2.2billion from FTX before it went under;
SBF's lawyers filed to dismiss charges in May 2023 but were unsuccessful;
SBF's bail was revoked in August 2023 due to concerns of witness tampering;
The trial of SBF began in October 2023;
In November 2023, SBF was found guilty of 7 charges.
Before the sentencing verdict was delivered, a presentence probation officer complied a report recommending a 100-year sentence. The Department of Justice urged a 40 to 50 year sentence, and SBF's lawyers suggested 63 to 78 months. SBF's legal team argued there was a lack of actual losses by the victims based on FTX's bankruptcy estate estimation that creditors will likely be made whole and repaid as much as 120-140 per cent of what their assets were worth on the day of FTX's bankruptcy.
John Ray strongly criticised the argument by SBF's legal team last week, saying that despite the exchange returning "substantial value to creditors" SBF
continues to live a life of delusion.
Michael Lewis' book about FTX, Going Infinite, however criticised Mr Ray's actions after being appointed, which he claimed increased fees dramatically.
A dozen of creditors submitted letters saying they suffered hardships because they couldn't access their funds for the last year and a half.
Once considered a prominent figure in the crypto world, SBF's fall from grace now places him among the ranks of individuals convicted of major U.S. financial crimes, including Bernie Madoff, Jordan Belfort, and Ivan Boesky. An appeal over the verdict and the sentencing is planned.
By Jake Huang and Michael Bacina