Sam Bankman-Fried, once the CEO of FTX and a billionaire wunderkind of the cryptocurrency world, will be sentenced to prison time on Thursday in New York City.
Should the judge in his case impose the harshest penalty allowed, the 32-year-old would face more than 100 years and die an incarcerated man, a possibility his lawyer has called “grotesque.”
In advance of the hearing, lawyers for the US Department of Justice and for Bankman-Fried have engaged in bitter back-and-forth over how long of a prison sentence would be appropriate. His lawyers have argued for a minimal sentence of just six years. Prosecutors are advocating for 40-50 years for his “unmatched greed and hubris” in perpetrating the $8bn (£6.3bn) fraud.
“Even now Bankman-Fried refuses to admit what he did was wrong,” Manhattan prosecutors wrote.
FTX imploded in November 2022 after Bankman-Fried and those in his inner circle comingled funds from the exchange with a closely-associated hedge fund, Alameda Research. The result was Bankman-Fried and others using their customers’ money for their own personal ends. The mixture created an $8bn budget shortfall that, when enough customers asked to withdraw their cryptocurrency, brought the exchange down.
Bankman-Fried maintained his innocence throughout a month-long trial last year. Prosecutors said that the CEO “misappropriated and embezzled” billions of dollars in his management of FTX. He was convicted in November on seven counts of wire fraud and conspiracy to launder money.
Bankman-Fried continues to contend that any mistakes he made have solutions within easy reach, writing in a February bankruptcy filing that FTX’s “harm to customers, lenders and investors is zero” because “the money was there – not lost”.
The CEO appointed to oversee FTX’s complex bankruptcy, John Ray, has lambasted Bankman-Fried’s conduct during the trial and its aftermath. He called Bankman-Fried’s recent statements “demonstrably false”.
“Mr Bankman-Fried continues to live a life of delusion. The ‘business’ he left on 11 November 2022 was neither solvent nor safe,” Ray wrote in a 20 March court filing. Ray said Bankman-Fried lavished company funds on “luxury homes, private jets, and overpriced speculative ventures”.
“Customers will never be in the same position they would have had they not crossed paths with Mr Bankman-Fried and his so-called brand of ‘altruism’,” Ray wrote.
Bankman-Fried’s inner circle lived with him in a $35m, 12,000 sq ft penthouse overlooking a yacht marina in the Bahamas while they ran the company together.
In a stark reversal of fortune, though, several members of FTX’s top brass testified against him during his trial. Caroline Ellison, his on-again, off-again girlfriend of several years and the CEO of Alameda Research, served as the prosecution’s star witness. She confessed to committing fraud and said on the stand that she had done so repeatedly at Bankman-Fried’s direction. She made a deal with prosecutors to plead guilty to seven counts of wire fraud, securities fraud, and money laundering.
The former mogul himself took the stand near the end of his trial in a last-ditch gamble to persuade the jury. He defended his role in the collapse of FTX by saying he had been overwhelmed by overnight success and blamed the company’s failure on Ellison. Under a prosecutor’s glaring questioning, though, he repeated the phrase “I do not recall” more than 100 times, denying he remembered statements he made while being recorded.
“Did you defraud anyone?” his defense attorney, Mark Cohen, asked.
“No, I did not,” said Bankman-Fried.
“Did you take customer funds?” asked Cohen.
“No,” said Bankman-Fried.
