Sam Bankman-Fried, the former cryptocurrency tycoon who was convicted of fraud, was sentenced to 25 years in prison on Thursday, capping an extraordinary saga that upended the multibillion-dollar cryptocurrency industry and became a cautionary tale about greed and arrogance.
Mr. Bankman-Fried's sentence was shorter than the 40 to 50 years that federal prosecutors had recommended, but longer than the six-and-a-half-year sentence sought by defense attorneys. A federal probation officer had recommended 100 years, just short of the maximum possible sentence of 110 years behind bars.
The sentence was handed down by Judge Lewis A. Kaplan in Federal District Court in Manhattan. Mr. Bankman-Fried, 32, was in the courtroom, clean shaven and dressed in a baggy brown prison uniform.
Before the sentence was handed down, Bankman-Fried apologized to FTX customers, investors and employees. “A lot of people feel really disappointed, and they felt very disappointed,” she said. “I'm sorry for that. I'm sorry for what happened at every stage.” He added that his decisions “haunt” him every day.
The ruling marked the end of a wide-ranging fraud case that exposed rampant volatility and risk-taking in the loosely regulated world of cryptocurrencies. In November 2022, Bankman-Fried's cryptocurrency exchange FTX imploded virtually overnight, wiping out $8 billion in customer savings. At a trial last fall, he was found guilty of seven counts of fraud, conspiracy and money laundering.
His sentence is one of the longest imposed on a white-collar defendant in recent years. Bernie Madoff, who orchestrated a notorious Ponzi scheme that collapsed during the 2008 financial crisis, received a 150-year sentence in 2009. He was in his 70s at the time and died 12 years later. Elizabeth Holmes, convicted of defrauding investors in her blood testing startup, Theranos, was sentenced to 11 years and three months in 2022.
A representative for Bankman-Fried did not immediately respond to a request for comment.
Just 18 months ago, Bankman-Fried was a corporate titan and one of the youngest billionaires on the planet. With his face plastered on billboards and magazine covers, he could seemingly raise money at will. He rubbed shoulders with superstar actors, musicians and athletes, cultivating an image of a nerdy do-gooder who intended to donate all of his wealth to charity.
Based in the Bahamas, FTX was one of the largest cryptocurrency exchanges: an easy-to-use platform where investors could exchange dollars or euros for digital currencies such as bitcoin and Ether. Its valuation was above $30 billion.
But in less than a week in November 2022, a run on deposits exposed an $8 billion hole in FTX accounts. Bankman-Fried resigned, handing power to a team of lawyers who quickly declared bankruptcy. The following month, he was arrested at his luxury apartment in the Bahamas and accused of stealing from clients to fund billions in political contributions, charitable donations and investments in other startups.
The investigation moved at a surprising speed for such a complex case. Within months, three of Bankman-Fried's top aides, including an ex-girlfriend, pleaded guilty to fraud charges and agreed to cooperate with prosecutors. Mr. Bankman-Fried was initially granted home detention, but the judge revoked his bail in August after ruling that he had attempted to intimidate witnesses and sent him to the Metropolitan Detention Center in Brooklyn.
At the October trial, Bankman-Fried's former colleagues testified for the prosecution and told jurors that they had conspired with him to loot client accounts. When he took the witness stand, Mr. Bankman-Fried seemed evasive at times, repeatedly stating that he could not remember crucial details from his tenure at FTX.
After he was convicted, Mr. Bankman-Fried's lawyers and family embarked on a far-reaching campaign to secure a lenient sentence and rewrite the public narrative about FTX's failure. In a sentencing memorandum, Marc Mukasey, one of the defense attorneys, argued that Bankman-Fried had sometimes behaved strangely on the stand because he was autistic. He also cited the mogul's charitable initiatives, arguing that FTX was supposed to be a force for good in the world.
But the defense case focused on the money FTX users lost when the exchange failed. Mukasey claimed that clients would be compensated in the bankruptcy process, reducing to “zero” the losses caused by Bankman-Fried's actions.
The government rejected that argument. While new FTX leadership has predicted that customers will eventually get their deposits back, the money they will receive will be equivalent to the dollar value of their holdings in November 2022, and will not represent a recent surge in crypto markets that sent bitcoin to its highest price to date.
Bankman-Fried “demonstrated a blatant disregard for the rule of law,” prosecutors wrote in a sentencing memorandum. He “knew what society considered illegal and unethical, but ignored it based on pernicious megalomania.”
Judge Kaplan said Thursday of FTX victims: “The defendant's assurance that they will be paid in full is misleading. It is logically flawed. “It's speculative.”
Over the past few weeks, prosecutors submitted dozens of letters from victims of Bankman-Fried's crimes explaining how the financial losses had devastated their lives. One customer said the FTX collapse caused him to have “suicidal thoughts.”
“Sam Bankman-Fried has to think for the rest of his life about the multitude of lives he destroyed with his selfishness and superficiality,” the client wrote. “I really hope that justice teaches him the difference between life and video games.”
An FTX client, Sunil Kavuri, who lost $2 million in the implosion of the cryptocurrency exchange, spoke at the sentencing hearing. “I've been living the FTX nightmare for almost two years,” he said.
Mukasey sought to distance his client from other scammers. “Sam wasn't a ruthless financial serial killer who set out to hurt people every morning,” he said, adding, “Really, he's an awkward math nerd.”
Bankman-Fried has vowed to appeal her conviction and hired an attorney from the Shapiro Arato Bach law firm to oversee that effort.
But Bankman-Fried appeared to accept Thursday that he would be in prison for some time. “At the end of the day, my useful life is probably over,” he said.
Matthew Goldstein contributed with reports.
