New Delhi: Sam Bankman-Fried, the renowned founder of cryptocurrency exchange FTX, was sentenced to 25-years in prison by a judge on Thursday. Bankman-Fried was found guilty of embezzling a staggering $8 billion from customers of the now-bankrupt company. FTX, once hailed as one of the world’s leading platforms for trading digital currency, has since filed for bankruptcy. US prosecutors were seeking a 40-50 years prison sentence.
During the court hearing in Manhattan, US District Judge Lewis Kaplan delivered the verdict, dismissing Bankman-Fried’s assertion that FTX customers didn’t suffer financial losses and that he provided false testimony during the trial.
After a five-week trial investigating the dramatic downfall of Sam Bankman-Fried, a New York jury convicted him in November. US prosecutors aimed for a lengthy prison sentence of 40 to 50 years for the one-time high roller.
On November 2, a jury convicted Bankman-Fried, aged 32, on seven counts of fraud and conspiracy related to FTX’s collapse in 2022, deemed by prosecutors as one of the most significant financial frauds in US history. Judge Kaplan noted Bankman-Fried’s lack of remorse during the proceedings.
Kaplan determined that FTX customers incurred losses totaling $8 billion, while equity investors of FTX suffered a loss of $1.7 billion. Additionally, lenders to Alameda Research, the hedge fund founded by Bankman-Fried, faced losses amounting to $1.3 billion.
The judge further concluded that Bankman-Fried provided false testimony during the trial, particularly regarding his knowledge of his hedge fund’s use of customer deposits obtained from FTX.
Caroline Ellison, former Alameda CEO and alleged girlfriend of Sam Bankman-Fried, testified that Alameda had allegedly misappropriated approximately $14 billion from FTX clients. Ellison claimed Bankman-Fried “directed me to commit those crimes,” raising serious concerns about the integrity of both companies and ethical practices within the cryptocurrency trading industry.
Who Is Sam Bankman-Fried?
- Sam Bankman-Fried, a graduate of the Massachusetts Institute of Technology, who swiftly ascended the ranks of the crypto realm, achieving billionaire status before the age of 30.
- Hailing from a lineage of Stanford law professors, Bankman-Fried embarked on an academic journey in physics at MIT. Following this, he delved into the world of finance, honing his skills in ETF trading at a quantitative firm. However, it was in late 2017 that he made a pivotal shift towards crypto trading, marking a significant transition in his career trajectory.
- Co-founding FTX in 2019, Bankman-Fried propelled the once modest startup into the world’s second-largest exchange platform. By early 2022, the collective valuation of FTX and its U.S. operations soared to an impressive $40 billion
- Bankman-Fried became one of the richest people in crypto, before his empire came crashing down in November 2022.
- In November 2022, the FTX empire collapsed amid a financial scandal. Customers panicked upon discovering that their funds had been diverted to risky operations at Sam Bankman-Fried’s hedge fund, Alameda Research, triggering a wave of withdrawal requests and casting doubt on the integrity of the cryptocurrency industry.
