Former FTX CEO Sam Bankman-Fried was sentenced to 25 years in prison by a Manhattan federal judge on Thursday after being found guilty last year of orchestrating a multibillion-dollar fraud scheme at the now-bankrupt crypto exchange.
The big picture: U.S. prosecutors wanted Bankman-Fried, 32, to serve 40 to 50 years for one of the "biggest financial frauds in American history."
- Bankman-Fried has maintained his innocence, appealed his conviction and sought a lower sentence to five to seven years.
- Millions of people have been affected by the fraud scheme and the resulting bankruptcy of FTX and other companies founded by Bankman-Fried.
- FTX has claimed it expects to liquidate and repay customers "in full" for cryptocurrency deposits that were frozen. But the exact details of that payout has so far left customers feeling they are being shortchanged, Reuters reported.
FTX's collapse:
FTX's meltdown occurred in November 2022 following a CoinDesk report that revealed SBF-founded trading firm Alameda Research's assets mostly included speculative crypto tokens created by FTX.
- The report prompted Changpeng Zhao, the CEO of rival crypto exchange Binance, to announce that his company would fully remove FTT, one of those speculative tokens, from its balance sheet.
- The situation set off a bank run when the price of FTT began falling.
FTX customers withdrew $6 billion collectively in 72 hours.
- The company halted withdrawals due to lack of funds, and the chaos set off a wider collapse in the crypto market.
- Days later, Binance announced it would acquire rival FTX.com, pulling the deal just a day later after learning of U.S. investigations into the exchange's collapse.
Bankman-Fried legal troubles:
FTX announced bankruptcy and Bankman-Fried stepped down as CEO on Nov. 11, 2022.
- That was a day after the Securities Commission of the Bahamas froze the assets of FTX's local subsidiary because of public allegations that customers' funds had been "mishandled" or "mismanaged."
On Dec. 12, the Bahamas arrested Bankman-Fried for extradition to the U.S.
- A day later, the Justice Department, U.S. Securities and Exchange Commission and other U.S. agencies announced charges against Bankman-Fried, alleging he engaged in a scheme to defraud FTX customers.
- He was charged with, and pleaded not guilty to, several counts of fraud, conspiracy, campaign finance law violations and money laundering.
- By the month's end, the securities regulator of the Bahamas seized $3.5 billion in digital assets controlled by FTX.
Bankman-Fried on trial:
His trial began in October 2023.
- During it, prosecutors alleged he lied to investors, customers and lenders about FTX's financial situation to embezzle customer money to plug losses at Alameda Research as well as for luxury purchases and political campaigns donations.
Bankman-Fried's defense argued that he acted in good faith and he didn't know Alameda had been using FTX customer funds deposited into Alameda's bank accounts.
- The jury announced Nov. 2 that it found Bankman-Fried guilty on seven counts.
Go deeper: FTX CEO on Sam Bankman-Fried: "Continues to live a life of delusion"
Editor's note: This story has been updated with the latest.
