Sam Bankman-Fried, SBF, has been sentenced to 25 years in prison for stealing billions of dollars from customers of his cryptocurrency exchange FTX. The 32-year-old was found guilty in November on two counts of wire fraud and five counts of conspiracy following the collapse of FTX in November 2022. The exchange had merged assets with sister hedge fund Alameda Research amid cash problems, leading waves of customers to withdraw funds. Bankman-Fried was indicted the next month.
"He knew it was wrong," U.S. District judge, Lewis Kaplan said of Bankman-Fried after a two hour hearing. "He knew it was criminal. He regrets that he made a very bad bet about the likelihood of getting caught. But he is not going to admit a thing, as is his right."
Kaplan said he had found that FTX customers lost $8 billion, FTX's equity investors lost $1.7 billion, and lenders to the Alameda Research hedge fund Bankman-Fried founded lost $1.3 billion.
Referring to his FTX colleagues, Bankman-Fried told the judge, "They put a lot of themselves into it, and I threw that all away. It haunts me every day." the 32-year-old said he made "a lot of mistakes,” but maintained FTX had the ability to repay customers when it imploded. His parents, Joseph Bankman and Barbara Fried, were present in the courtroom.
"The defendant's assertion that FTX customers and creditors will be paid in full is misleading, it is logically flawed, it is speculative," Kaplan said. "A thief who takes his loot to Las Vegas and successfully bets the stolen money is not entitled to a discount on the sentence by using his Las Vegas winnings to pay back what he stole."
Bankman-Fried is also expected to be ordered to pay restitution. The 32-year-old capitalized on a rise in bitcoin which accounted for much of his net worth that at one point was estimated to be $26 billion.
Kaplan made a recommendation to the federal Bureau of Prisons about where SBF should serve his time. "I strongly recommend to the Bureau of Prisons that the defendant be designated initially to a medium security facility or any lower security institution the BOP considers appropriate, and I do so for two reasons," the judge said.
"First, I have no reason to believe that the defendant would initiate any act of violence against another prisoner or any BOP staff," which Kaplan said would typically merit assignment to a maximum security prison facility.
"Second, defendant's notoriety. His association with vast wealth – regardless of his present and actual financial resources – and his autism and social awkwardness are likely to make him more than usually vulnerable to misconduct by other inmates in the environment of a maximum security facility," Kaplan explained. "I further recommend that the designated facility be as close to the San Francisco Bay Area as possible for the purpose of facilitating family visitation."
Prosecutors had sought a 40- to 50-year sentence for the disgraced crypto king. Bankman-Fried's defense team will appeal the conviction and sentencing.
Critics wonder whether SBF's parents, both Stanford Law faculty members, who received a $16.4 million luxury home located in the Bahamas as well as a $10 million cash gift, will face any criminal charges, as details of their involvement emerge from a lawsuit filed in September 2023, by Alameda Research and the FTX debtors.