The co-founder of FTX and “wunderkind” of the world of cryptocurrencies, Sam Bankman-Fried, He was sentenced this Thursday to 25 years in federal prison and to return more than 11,000 million dollars for his conviction on charges related to fraud and money laundering, following the collapse of his company in what is considered one of the largest “white collar” scams in recent decades.
Actually, he got it cheap enfant terrible from the crypto world. Because Bankman-Fried (32), who made headlines for becoming one of the youngest mega-billionaires in history, faced a maximum sentence of more than 100 years for seven crimes including several charges of fraud and money laundering.
The prosecutors asked for between 40 and 50 years, while the young man’s lawyers proposed only 5 years and three months to 6 and a half years, since they assured that he intends to return the defrauded money to those affected.
Known by the nickname “SBF”, Bankman-Fried used customer deposits without consent of the platform to make risky transactions in his hedge fund, Alameda Research.
The money disappeared, the jury concluded, because Bankman-Fried had carried out an elaborate fraud in which billions of dollars of user funds went to Alameda and were used to finance high-risk operations, gambling risk, debt repayment, personal loans, political donations and a lavish life in the Bahamas.
A billionaire before the age of 30, Bankman-Fried conquered the world of cryptocurrencies at breakneck speed, turning FTX, a small start-up he co-founded in 2019, into the second largest exchange platform in the world.
But in November 2022, the FTX empire imploded, unable to cope with massive withdrawal requests from customers terrified upon learning that some of the funds deposited with the company had been compromised in risky operations. At the time of its bankruptcy filing, approximately $9 billion was missing.
The final decision was made today by Judge Lewis Kaplan. In November, Bankman-Fried was found guilty by a New York jury of the seven counts of fraud and money laundering with which he was charged.
The defendant addressed the court directly today to say that he “regrets” what happened and that there were things that “should have done and shouldn’t have done.”
The young man also admitted that he made “a series of bad decisions” as CEO of FTX and even praised his former business partners, such as co-founder Gary Wang and his ex-girlfriend Caroline Ellison, who testified against him.
Together, everyone “built something beautiful”, said Bankman-Fried.
Millions of victims and more than US$550 million in losses
Millions of people have been affected by the fraud scheme and subsequent bankruptcy of FTX and other companies founded by Bankman-Fried.
Judge Kaplan said today that he found that amount of losses for victims of Bankman-Fried crimes exceeds $550 million, the upper end of the range given by federal sentencing guidelines. FTX stated that it expects to settle and refund customers “in full.”
The group’s liquidators have already recovered some $6.4 billion in cash and plan a full refund to affected customers. They benefited from the brutal appreciation of cryptocurrencies, which recovered after a catastrophic 2022 marked by several bankruptcies, including the FTX scandal. Today Bitcoin, the flagship of cryptocurrencies, returned to values close to its all-time high
In just one year, Sam Bankman-Fried went from posing on the covers of the American media as a “wunderkind” of the world of cryptocurrencies to appearing in handcuffs on the news for being accused of federal charges of fraud and money laundering.
During the trial, which lasted five weeks, His lawyers presented him as a young businessman overwhelmed by his workload. and a victim of errors of judgment by his partners and employees.
To gain clemency from the federal magistrate, they also mentioned that he suffered an autism spectrum disorder which, in his opinion, makes him “vulnerable within the prison population.”
“In every aspect of his activity and for each of the crimes committed, the accused has shown a blatant lack of respect for the law,” Williams’ prosecutors insisted.
In the process, “SBF’s” defense was weakened by the testimonies of three former directors of FTX and Alameda, including Ellson, his ex-girlfriend, who provided detailed evidence of the defendant’s main role in the fraud.
“He understood the rules, but decided they did not apply to him,” the prosecutor’s office insisted in a document sent to the judge, citing a “pernicious megalomania” and a “superiority complex.”