Downfall and conviction of Sam Bankman-Fried

Category: Americas Blockchain Crypto
Posted by Lea Hogg

Sam Bankman-Fried, the co-founder of the now-defunct cryptocurrency exchange FTX, has been handed a 25-year prison sentence for defrauding his firm’s customers and investors. This marks the end of a dramatic fall from grace for the former billionaire, who was once a prominent advocate for cryptocurrency before the spectacular collapse of his company in 2022.

It was discovered that Bankman-Fried had misappropriated billions from his clients prior to the company’s failure. Despite the conviction, his legal team plans to file an appeal. Bankman-Fried’s parents  (in photo above), expressed their devastation, vowing to continue their fight for their son. They said, “We are heartbroken and will continue to fight for our son.”

The 32-year-old expressed his regret in court, acknowledging that many felt disappointed. He apologized for the events that transpired. FTX, once among the world’s largest crypto exchanges, catapulted Bankman-Fried to business fame and attracted millions of customers who used it for cryptocurrency transactions. However, in 2022, rumours of financial instability led to a rush on deposits, triggering the company’s collapse and revealing Bankman-Fried’s illegal activities.

Dramatic end to a once-luminous crypto career

He was found guilty by a New York jury last year on several charges, including wire fraud and conspiracy to commit money laundering. The trial revealed that he had taken more than $8 billion from customers, which he used for property purchases, political donations, and other investments. Judge Lewis Kaplan, before announcing the sentence, offered a stern critique of Bankman-Fried’s actions. He stated, “He knew it was wrong. He knew it was criminal. He regrets that he made a very bad bet about the likelihood of getting caught but he’s not going to admit a thing.” The judge further criticized Bankman-Fried’s lack of remorse for his crimes, despite expressing sorrow over customer losses.

This case has left many feeling deceived by Bankman-Fried’s gamble, leading to his fall from grace in the crypto world. Federal prosecutors in New York argued that Bankman-Fried, despite committing a massive fraud and showing a “brazen disrespect” for the law, did not warrant an excessively long sentence. However, they did propose a minimum sentence of 40 years.

On the other hand, Bankman-Fried’s defence team advocated for a significantly lighter sentence of approximately five to 6.5 years. They highlighted that he was a non-violent, first-time offender who was dealing with mental health issues. They also noted that a plan was in progress in bankruptcy court, which would enable customers to recover a substantial portion of their losses. During the sentencing, Judge Kaplan expressed that a life sentence for Bankman-Fried was not necessary. However, he stated that the punishment should be severe enough to deter him from future criminal activities. He stated, “There is a risk that this man will be in a position to do something very bad in the future and it’s not a trivial risk, not a trivial risk at all.”

In addition to the sentence, Judge Kaplan ordered Bankman-Fried to forfeit $11 billion, which will be used to compensate the victims. Some of these assets, including shares in the trading app Robinhood that Bankman-Fried owned and which raised over $600 million when sold last year, have already been seized by the government.

Despite the severity of the ruling, Bankman-Fried showed little visible reaction.