By Brett Rowland (The Central Square)
A judge sentenced FTX founder Samuel Bankman-Fried to 25 years in prison on Thursday, marking the former cryptocurrency star’s long fall.
U.S. District Judge Lewis Kaplan also sentenced Samuel Bankman-Fried, known as SBF, to three years of probation and ordered him to pay $11 billion for orchestrating a massive fraud.
Bankman-Fried, founder of cryptocurrency exchange FTX and cryptocurrency trading firm Alameda Research, misappropriated billions of dollars of customer funds deposited with FTX. According to prosecutors, he defrauded FTX investors of more than $1.7 billion and Alameda lenders of more than $1.3 billion.
“There are serious consequences for defrauding customers and investors,” Attorney General Merrick Garland said in a statement. “Anyone who believes they can hide their financial crimes behind wealth and power, or behind some shiny new thing they claim no one else is smart enough to understand, should think twice.”
Bankman-Fried, 32, of Stanford, California, was previously convicted of two counts of wire fraud, two counts of conspiracy to commit wire fraud, one count of conspiracy to commit securities fraud, one count of conspiracy to commit commodities fraud and one count of conspiracy to commit money laundering, after a month-long trial.
Bankman-Fried once headed FTX, a digital asset trading platform whose popularity skyrocketed before collapsing in 2022. Before the scandal, Bankman-Fried spent time with the rich and powerful. According to OpenSecrets, Bankman-Fried gave approximately $40 million in public donations in the 2022 election cycle, of which the vast majority, $36.8 million, went to Democratic-affiliated groups. After the scandal, those who had taken Bankman-Fried’s money were quick to return it, as The Center Square had already done reported.
Bankman-Fried’s sentence is among the longest for fraud in the United States
Bernard Ebbers, co-founder and CEO of WorldCom, was sentenced to 25 years, but was released after 13 years due to declining health. He died a month after his release.
Enron CEO Jeffrey Skilling initially got 24 years, but the sentence was later reduced to 14 years. He was released in 2019 after serving 12 years.
Bernie Madoff, the financier behind the largest known Ponzi scheme, got 150 years. He died in 2021 after serving nine years.
Bankman-Fried was the founder and CEO of FTX, an international cryptocurrency exchange. From 2019 to 2022, according to federal prosecutors, he was the leader and mastermind of a scheme to defraud FTX customers by misappropriating billions of dollars of those customers’ funds.
Bankman-Fried took FTX client funds for personal use, to make investments and millions of dollars in political contributions to candidates, and to repay billions of dollars in loans owed by Alameda Research, a cryptocurrency exchange fund also founded by Bankman -Fried. Bankman-Fried also defrauded Alameda lenders and equity investors in FTX by providing them with false and misleading financial information that concealed his misuse of customer deposits, prosecutors said.
Syndicated with permission from The Center Square.