After his cryptocurrency startup, FTX, crumbled practically overnight, setting off a massive federal investigation, Sam Bankman-Fried now faces a 25-year prison sentence. The jury’s verdict in November 2023, finding Bankman-Fried guilty on seven counts of fraud and conspiracy, made it unsurprising that such an outcome awaited him. The only lingering question before the court session was the duration of his sentence, ultimately decided by Judge Lewis Kaplan.
Read more: Sam Bankman-Fried has been arrested following FTX collapse
From wealth to infamy
Bankman-Fried’s downfall represents the culmination of his journey from an extremely wealthy entrepreneur and prominent political donor to the most significant target in the US government’s crackdown on misconduct in cryptocurrency markets. He has been held in custody at the Metropolitan Detention Center in Brooklyn since August 2023, when his bail was revoked due to suspected witness tampering on two occasions. Judge Kaplan has recommended that Bankman-Fried be incarcerated in a prison near San Francisco.
Judge’s considerations
The imposed sentence of 25 years is considerably shorter than the 40 to 50 years sought by the prosecutors. Judge Kaplan took various factors into account, including the audacity of the crimes and Bankman-Fried’s potential for future criminal activity. Prior to the revelation of his sentence, Bankman-Fried addressed the court and delivered a somewhat rambling statement, acknowledging the mistakes he made during his tenure as FTX‘s CEO.
In addition to the prison sentence, Judge Kaplan ordered Bankman-Fried to forfeit $11 billion, which includes assets and properties acquired with embezzled customer funds. The forfeiture will be paid over time, with Bankman-Fried expected to surrender all available assets and make monthly nominal payments.
Bankman-Fried’s argument that former FTX customers did not suffer any losses because the bankruptcy estate suggested they would recover most of their funds was firmly rejected by Judge Kaplan. He deemed such a claim as misleading, logically flawed, and speculative.
New custodian
The reins of FTX have now been handed over to corporate restructuring expert John J. Ray III, who previously oversaw the liquidation of Enron in the early 2000s. In a letter to the court, Ray stated that the company Bankman-Fried left behind was financially unsound and unsafe, and any retrieved assets were the result of his team’s diligent efforts over the past 18 months.
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