FTX founder gets 25 years for defrauding investors of $10 billion

[Teacher]

The judge questioned the remorse of the crypto king for "terrible crimes".

FTX founder Sam Bankman-Fried has been sentenced to 25 years in prison for large-scale fraud and conspiracy that led to the collapse of his company and its associated hedge fund, Alameda Research. The sentence is significantly less than the 40-50 years required by federal prosecutors, but significantly longer than the 5-6.5 years proposed by Bankman-Fried's lawyers.

Judge Lewis Kaplan, sentencing 32-year-old Bankman-Fried, stressed the risk that the convict will be able to commit new crimes in the future, noting that the risk is not small at all. Kaplan also said that he did not hear a word of remorse from Bankman-Fried for committing "terrible crimes" and pointed out his "evasive" answers during the testimony.

Bankman-Fried, the founder of a company previously valued at $32 billion, was convicted on 7 criminal counts, including securities fraud, which resulted in a loss of about $10 billion. client funds. Prosecutors alleged that Bankman-Fried led a conspiracy to embezzle client funds for investment, political donations to both major U.S. parties, and personal use, as well as to repay loans taken out by Alameda Research.

Before sentencing, Bankman-Fried expressed regret, hinting that the loss of billions of dollars of customers was the result of a "liquidity crisis" or "mismanagement" and not fraud. He acknowledged his responsibility as CEO of FTX, while expressing the hope that customers will eventually get their funds back, despite accusations that the federal bankruptcy court is hesitant to return funds to customers.

Prosecutors and victims criticized Bankman-Fried, highlighting the enormous damage his actions have caused to clients around the world. Prosecutor Nicholas Roos described FTX's collapse not as a "liquidity crisis or an act of mismanagement", but as a "theft" of billions of dollars of client funds.

After the verdict, lawyer Merrick Garland made a statement, emphasizing that the Bankman-Fried case is one of the largest financial frauds in history, demonstrating a disregard for customer expectations and the rule of law. The Bankman-Fried family expressed regret over the verdict and expressed their intention to continue fighting.

 

[Teacher]

"Too Little": Community on Sam Bankman-Fried's deadline

On March 28, former FTX CEO Sam Bankman-Fried (SBF) was sentenced to 25 years in prison. However, even this term was considered soft by the crypto community.

Asymmetric's general partner, Dan Held, said the sentence was "not long enough, given his [SBF's] actions and the actual damage caused."

Breaking: SBF gets 25 years in prison.

Not nearly long enough given his actions, feelings around his actions, and actual damage caused.
— Dan Held (@danheld) March 28, 2024

https://twitter.com/x/status/1773377661470982456

Variant Foundation General Counsel Jake Czerwinski compared the sentences of SBF and Ross Ulbricht, who received two life sentences and 40 years for creating the darknet marketplace Silk Road.

If you're following all the news about SBF today, take one moment to reflect on Ross Ulbricht.

SBF got 25 years. That's a long time, but he'll get out and have a life left afterward.@RealRossU got two life sentences, plus 40 years.

This is not justice.https://t.co/nOnKQFkctx
— Jake Chervinsky (@jchervinsky) March 28, 2024

https://twitter.com/x/status/1773379331240194069

"This is not justice," he wrote.

Former NSA and CIA employee Edward Snowden was surprised by the" soft " verdict against Bankman-Fried.

"Damn it, they gave him less for a much worse crime than Chelsea Manning,"Snowden noted .

Head of the Ethena Development Department.Labs Seraphim Checker drew parallels with the case of Tornado Cash developer Alexey Pertsev, who faces up to five years in prison.

Doesn’t it drive you mad

SBF defrauds the whole world and gets 25 (will probs get out early)

Pertsev on trial for writing a smart contract and is treated the same way or worse
— Seraphim (@MacroMate8) March 28, 2024

https://twitter.com/x/status/1773381245830942911

"Doesn't it drive you crazy? SBF cheats the whole world and gets 25 (possibly released early). Pertsev is being sued for writing a smart contract, and he is being treated the same or worse, " added Checker.

The verdict to Bankman-Fried may be the end of an unfortunate era for the crypto industry, according to Michael Zilberberg, head of communications at Alt Tab Capital.:

"We are focused on the crypto market, and this test is the end of its sad chapter. Enron didn't mean that all energy markets were fraudulent, and [Bernard] Madoff wasn't an indicator of all hedge funds. We believe in the reliability of the cryptocurrency market and support the prosecution of intruders."

The influencer under the nickname 0xSisyphus emphasized that the term for SBF is "short", but still significantly longer than the time of existence of the crypto industry.

SBF’s sentencing time is “short” but still meaningfully longer than the amount of time the crypto industry has existed for
— Sisyphus (@0xSisyphus) March 28, 2024

https://twitter.com/x/status/1773380542098002063

Meme tokens with Sam

Before and after the SBF verdict, the market was flooded with a wave of themed meme tokens.

The Sam Baseman Fraud coin launched a few hours before the trial in the Base L2 decision with the FTX ticker increased by 23,300% in less than a day-to a peak of $0.0145. However, the asset later corrected to $0.0034.

According to DexScreener, at the time of writing, FTX has a market capitalization of $341,000.

At the same time, a meme coin Som Bonkmon Fraud (SBF) appeared on Solana. The token quickly grew from $0.000095 to $0.012 — by 12,500%. But traders also quickly sold off the asset, bringing the price down by 95% from the maximum.

The coin has become an addition to a series of parody tokens of celebrities with spelling mistakes like Danold Tromp and Olen Mosk. The capitalization of one such meme coin-Jeo Boden (BODEN) — exceeded $200 million.

The native token of the FTX exchange (FTT) after the sentencing of its founder collapsed by 20%, to $1.90.

Recall that in late February, SBF lawyer Mark Mukasi requested a sentence ranging from 63 to 78 months in prison for his client. The lawyer called the proposed life sentence too "grotesque".

The court received 29 letters in support of Bankman-Fried asking for a commutation of his future sentence, including from members of his family and a cellmate.

 

[Father]

"I didn't think it was illegal"-Sam Bankman-Fried's revelations after the verdict.

FTX founder Sam Bankman-Fried (SBF) is remorseful for his actions that led him to a 25-year prison sentence. He stated this in an interview with ABC News.

"It's a big part of what I think about every day," the former CEO of the trading platform added.

According to him, FTX's insolvency was the result of several "bad decisions" it made in 2022.

SBF said it had "heard and seen despair, frustration and a sense of betrayal from thousands of customers" who "deserve full compensation at current prices."

"[Damages] could and should have happened in November 2022, and it could and should happen today. It's painful to see them waiting day after day," he said.

Bankman-Fried "felt pain" from colleagues when he "threw away what they had invested their lives in." The former FTX CEO also regrets the situation of charitable organizations, " since their funding has brought nothing but reputational damage."

SBF said it never intended to "harm anyone or take away anyone's money", but it regrets the collapse of the company and accepts full responsibility as its head.

"I would give anything for the sake of compensation for at least part of the damage. I do my best while in prison, but it's very frustrating that I can't do more," said the founder of the collapsed company.

According to Bankman-Fried, if he or another FTX employee had stayed on as CEO, customers "would have been paid back long ago." SBF also criticized the company's decision not to restart the exchange.

Later, the former CEO's defense team plans to appeal based on some of the testimony at the trial, which " significantly distorted what actually happened."

"I never thought I was doing anything illegal. But I tried to meet high standards and definitely did not meet them," he stressed.

 

[Father]

FTX founder Sam Bankman-Fried (SBF), who was sentenced to 25 years in prison, said in an interview with Puck News that he is doing well in the Brooklyn Detention Center (MDC).

While waiting for the appeal to be considered, in July, the entrepreneur engaged in the rice trade. According to him, there are much more opportunities for arbitrage in prison compared to his previous life as a high-frequency trader.

Rice and beans "smelling like shit" are the mainstay of SBF's diet, which remains vegan in prison.

Journalists noted that Bankman-Fried "lost a lot of weight", dropping 11 kg. He became "less pot-bellied, less manic, less fussy", without bags under his eyes.

During the interview, he" almost always " looked the interviewer in the eye, which was rare for him in the past. SBF admitted that he "became adept at pretending", and he is doing well.

Along with 35 other prisoners, half of whom are alleged government-affiliated killers, Bankman-Fried is being held in a large open dorm-style room.

Reportedly, he is very bored, and from entertainment — only four TVs and a tablet that is not connected to the Internet, on which he plays games.

SBF is not worried about his safety, but does not sleep well as other convicts wake him up to ask about his rice to exchange.

The FTX founder talks to a new lawyer "almost every weekday for an hour," and approved prescription drugs help him "think clearly."

In an interview, Bankman-Fried lamented that he was blamed for the FTX collapse.

He called his only mistake negligence, because of which the platform was " vulnerable to the banking crisis and the insidious actions of competitors." SBF is convinced that civil rather than criminal punishment would be reasonable.

The journalists noted that Bankman-Fried "still does not believe that he committed any crimes," and considers himself innocent, who failed to sufficiently negotiate with prosecutors. He was "not very apologetic" about the $8 billion damage to customers.

 

[Father]

Lawyers for former FTX Digital CEO Ryan Salame have requested a reduced sentence of 18 months in prison. This is reported by CoinDesk with reference to the case materials.

While working for FTX and Alameda, Salame managed bank deposits and fiat conversions for the exchange's clients, was involved in political campaign finance, and led charitable initiatives in the Bahamas.

In September 2023, a top executive pleaded guilty to criminal charges related to the collapse of a cryptocurrency exchange. We are talking about conspiracy to make illegal donations and conduct an unlicensed money transfer business.

Earlier, the former head of the trading platform agreed to transfer ownership of a house in the Bahamas worth $5.9 million to creditors as restitution. Sentencing is scheduled for May 28, 2024.

According to the lawyers, Salame's role in both companies was less important in the context of fraud. They also referred to cooperation with the authorities, sincere remorse and efforts to address problems related to substance abuse.

"He had absolutely no idea that the four people at the head of Alameda and FTX were lying and stealing from their customers. Ryan didn't steal from anyone. He didn't lie to his clients. He was tricked. When he finally understood the FTX scam, he was the first to inform the Bahamian authorities, " the petition reads.

The information provided to Salama helped the Bahamian authorities initiate an investigation into FTX, lawyers say.

According to the defense, "incessant criticism of the exchange and [its founder] Sam Bankman-Fried in the media ensured that he would be punished for the rest of his life."

Salame became the fourth top manager to plead guilty. Prior to him, the former head of Alameda Research, Caroline Ellison, and FTX technical director Gary Wang, as well as the head of the exchange's engineering department, Nishad Singh, agreed to cooperate with the investigation.

 

[Tomcat]

A court in the Southern District of New York has sentenced former FTX Bahamian CEO Ryan Salame to 90 months (7.5 years) in prison.

According to the US Department of Justice, he also received three years of probation, is required to pay $6 million in forfeiture and more than $5 million in restitution.

Prosecutor Damian Williams said Salame's actions undermined public confidence in the election and the financial system.

"Salame has agreed to advance the interests of FTX, Alameda Research, and his associates through an illegal political influence campaign and unlicensed money transfer activities. Illegal actions have helped FTX grow faster and become bigger," he said.

• Source: https://www.justice.gov/usao-sdny/pr/former-ftx-executive-ryan-salame-sentenced-90-months-prison

 

[Man]

Convicted former FTX executive Ryan Salameh was booked into custody at FCI Cumberland on Oct. 11, 2024, according to Bureau of Prisons records.

Salameh was sentenced to 90 months in prison for his role in the 2022 collapse of FTX after pleading guilty to operating an unregulated money transmitting business and campaign finance charges in 2023.

The former FTX executive sought to delay his Oct. 11 appearance date to Dec. 7, 2024, citing ongoing treatment for a dog bite. That motion was vigorously opposed by prosecutors and was denied by Judge Lewis Kaplan in an Oct. 10 ruling.

Salameh unfazed by prison term

Despite Salameh’s multiple attempts to delay the start of his prison term, the former FTX executive said he was relatively unfazed by the 7.5-year sentence.

Salame jokingly changed his Twitter profile and updated his LinkedIn page to indicate that he is now an inmate at the Cumberland Correctional Facility in Maryland.

An Interview with Laura Shin Reveals All

Unchained podcast host Laura Shin interviewed Salame shortly before his sentencing began, in an episode that aired the day he surrendered to prison authorities.

When asked about withdrawing nearly $600,000 in cryptocurrency amid the FTX crash, the former executive told Shin that it was “not my brightest moment,” and explained that his entire net worth is in FTX.

Salame indicated that he needed the funds to cover legal expenses, but acknowledged that he should not have withdrawn the money. Furthermore, Salame claimed that at least one of those withdrawals was never spent and was turned over to the Justice Department weeks before the Unchained episode aired.

During the interview, the former executive also revealed plans to pursue a law degree. Salame said he was not interested in practicing law as a career, but sought to gain legal knowledge to represent himself, claiming that previous legal advice and guidance provided were inadequate and led to his criminal conviction.

• Source: https://x.com/rsalame7926
• Source: https://x.com/laurashin/status/1844732057240379411

 

[Man]

The co-founder and former CTO of the bankrupt crypto exchange FTX, Gary Wang, filed a petition in Manhattan Federal Court, asking the court to take into account his role as a key witness and not to sentence him to prison.

Lawyer Ilan Graff noted that his client should not be imprisoned for cooperation with the investigating authorities. Gary Wang got married in January 2023 and expects a son soon, so all he wants now is to be a good husband and father. At the same time, the former FTX CTO will continue to work with the government and other stakeholders to speed up the return of funds to FTX victims and reduce the risk of crypto fraud in the future, the lawyer said.

District Judge Lewis Kaplan is due to sentencing Gary Wang on November 20. Wang pleaded guilty to fraud and criminal conspiracy as part of an agreement struck with prosecutors weeks after the collapse of crypto exchange FTX in 2022. Wang was a key witness in the case of FTX founder Sam Bankman-Fried, telling jurors that he was tasked with changing FTX's code. This allowed fellow hedge fund Alameda Research to gain access to FTX customer funds for years.

The lawyer stressed that his client was the least involved in the fraudulent scheme, unlike former Alameda Research CEO Caroline Ellison and Wang's colleague Nishad Singh, who also testified in court against Bankman-Fried. Gary Wang was not informed of the details of the fraudulent scheme and did nothing to deceive anyone, the defense insists.

Bankman-Fried was sentenced to 25 years in prison, and Allison received two years in prison, while Singh was not given a prison term. Therefore, Graff argues that if Wang is imprisoned, it will be an unjust sentence.

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