Sam Bankman-Fried, Former FTX CEO, Sentenced 25 Years in Prison for Crypto Fraud

Sam Bankman-Fried, former CEO of defunct crypto exchange FTX, has been sentenced to a 25-year prison sentence related to the fraudulent use of customer funds at the exchange.

Earlier this morning, Bankman-Fried was sentenced to 300 months, or 25 years, in prison by Judge Lewis A. Kaplan in the United States District Court for the Southern District of New York. “Mr. Bankman-Fried knew that Alameda was spending customer funds on risky investments, political contributions and Bahamas real estate,” said Judge Kaplan, Inner City Press reported. “The funds were not his to use.”

Prosecutors had previously argued for Bankman-Fried to receive up to 50 years in prison. Meanwhile, Bankman-Fried’s defense lawyers were seeking a sentence closer to five or seven years. As of this morning, prediction market Polymarket had a sentence of 20 to 30 years as the most likely outcome, with more than $1 million worth of bets placed on the market.

FTX collapsed and filed for bankruptcy in Nov. 2022 after some irregularities were revealed regarding the crypto holdings of the closely associated investment firm Alameda Research. This eventually led to mass withdrawals from the exchange, which FTX was unable to process. It was eventually revealed that commingling of funds between FTX and Alameda Research had occurred, and customer withdrawals were unable to be processed due to those funds being used for alternative purposes. Customer loss was pegged at $8 billion.

Bankman-Fried was previously found guilty for his role in the crypto fraud in last November.

While an FTX bankruptcy plan is said to provide customers with the return of at least 90% of their money, the reality is much of customers’ balances were held in various crypto assets, which have skyrocketed in value since the exchange’s collapse. The bankruptcy plan locks in the dollar-denominated value of those holdings from around the time of the exchange’s collapse, so customers will miss out on the potential gains made in the crypto bull market since that time.

According to Inner City Press, Bankman-Fried’s defense lawyers tried to argue that customers will be paid back in full in an attempt to gain some leniency during the sentencing proceedings; however, this argument was rejected by Judge Kaplan, as this is only true in dollar-denominated terms. “A fortuitous run-up in the value of some cryptocurrencies bears no relation to the gravity of the crimes that were committed,” Kaplan was quoted as saying.