Convicted FTX fraudster Sam Bankman-Fried was sentenced to 25 years in prison today, according to news reports.
The founder and ex-CEO of cryptocurrency exchange FTX was sentenced this morning by Judge Lewis Kaplan in US District Court for the Southern District of New York. Bankman-Fried had requested a sentence of 63 to 78 months (5.25 to 6.5 years), arguing that he deserved leniency because of his "charitable works and demonstrated commitment to others."
Kaplan also reportedly ordered a forfeiture of $11.2 billion but said there would be no actual restitution because it would be "impractical."
Kaplan said today that Bankman-Fried committed perjury during the trial when he claimed to have no knowledge that Alameda spent FTX customer deposits before the fall of 2022, according to CNN. Kaplan also said that Bankman-Fried committed witness tampering before he was taken into custody when he communicated with the former FTX general counsel.
Kaplan said there is a risk "that this man will be in a position to do something very bad in the future, and it's not a trivial risk." Bankman-Fried did not show remorse even though "he knew it was wrong," Kaplan said.
"Kaplan also said he had found FTX customers lost $8 billion, FTX's equity investors lost $1.7 billion, and that lenders to the Alameda Research hedge fund Bankman-Fried founded lost $1.3 billion, rejecting Bankman-Fried's argument that customers would be paid back in full through the bankruptcy process," according to Reuters.
"The defendant's assertion that FTX customers and creditors will be paid in full is misleading, it is logically flawed, it is speculative," Kaplan was quoted as saying. "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."
SBF admits “series of bad decisions”
As The Washington Post reported, Bankman-Fried attorney Marc Mukasey said during today's hearing that "Sam was not a ruthless financial serial killer who set out every morning to hurt people. Sam Bankman-Fried doesn't make decisions with malice in his heart. He makes decisions with math in his head."
Bankman-Fried addressed the court after his lawyer spoke. "I am sorry about what happened at every stage, and there are things I should've done and things I shouldn't have," he said, according to CNN. Bankman-Fried said he made "a series of bad decisions."
The defendant claimed that he and his partners "built something beautiful" at FTX, "and I threw it all away." FTX's downfall "haunts me every day," he was quoted as saying.
Bankman-Fried seemed to acknowledge that he was about to receive a long sentence, saying "my useful life is probably over" and has "been over for a while now."
After Bankman-Fried's statement, prosecutor Nicolas Roos told the judge that "Sam Bankman-Fried stole over $8 billion in customer money, and I emphasize stole because it was not a liquidity crisis, or an active mismanagement, or poor oversight from the top."
Statutory maximum was 110 years
Bankman-Fried was convicted on seven charges with a combined maximum sentence of 110 years. The charges included wire fraud and conspiracy to commit wire fraud, securities fraud, commodities fraud, and money laundering.
A 100-year sentence was recommended in a presentence investigation report prepared by a probation officer, but US prosecutors asked the judge to put Bankman-Fried behind bars for 40 to 50 years. The US filing said Kaplan should "impose a sentence that underscores the remarkably serious nature of the harm to thousands of victims; prevents the defendant from ever again committing fraud; and sends a powerful signal to others who might be tempted to engage in financial misconduct that the consequences will be severe."
"A sentence of 40 to 50 years is necessary to serve such purposes," the US filing said. A 100-year term would effectively be a life sentence and "is not necessary," the US said.
"There is a significant likelihood that if the defendant is released back into society at a young enough age he will have the opportunity to engage in another fraud," prosecutors wrote, adding that Bankman-Fried "has already proven adept at crafting a self-serving public image, and his sentencing submission itself shows that he is already attempting to reframe his crimes as mere mistakes or misunderstandings."
Prosecutors disputed Bankman-Fried's claim that he wasn't motivated by greed, saying he "engaged in a myriad of fraudulent conduct to maximize his business's earnings and his own wealth." Bankman-Fried's attempt to downplay the losses to victims "are entirely meritless and fail to address the facts of this case or the governing law," the US sentencing recommendation said.
"Whether or not the exchange could have operated as a 'legitimate' business, the fact is that the defendant intentionally used its infrastructure to misappropriate billions of dollars, and that customer deposits were not safely custodied for them from the outset," the filing said.
Bankman-Fried's charitable giving "was charity with other people's money," the US said.
Chicago-based artist Peter Frederiksen (previously) pinpoints the most ridiculous, exaggerated moments in cartoons and animated shows to dramatize them further into absurdity. Cropping a single outlandish action or event, Frederiksen uses free-motion machine embroidery to stitch stylized compositions that, out of context, emphasize their dark humor.
Recent works include a Looney Tunes-style mishmash of feet and fists that burst through a bulging door in “Some locks won’t hold” and the tongue-in-cheek archery challenge of “Going easy on myself.” Often focusing on escalated tensions, the embroideries accentuate moments of high anxiety in a nostalgic, comforting childhood medium.
Frederiksen has started to switch to digital jacquard weavings for larger pieces. The base becomes a guide for his stitches and provides a colorful backing, which allows for less dense compositions. He’s also incorporated more unwieldy crops, including in works like “The days keep getting longer,” portraying a preposterously elongated filing cabinet.
In April, Frederiksen will open a solo show at Steve Turner Gallery in Los Angeles, along with a dual show in June at UNION Gallery in London. He plans to release a limited-edition print with All Star Press on April 25 and has a candle collaboration coming this spring with Varyer. Follow his latest works and chances to attend one of his workshops in Chicago on Instagram.
The CEO of FTX Trading, John Ray, sent a letter to Judge Lewis Kaplan Wednesday to correct what he called "callously" and "demonstrably false" claims that disgraced FTX founder Sam Bankman-Fried made in hopes of receiving a lighter sentence for crimes including defrauding FTX customers.
In a sentencing memo, Bankman-Fried asked the court to drastically slash his prison sentence from what he considered a "grotesque" 110-year maximum to five to six years. Prosecutors have suggested the sentence should be between 40 and 50 years, but Bankman-Fried claimed such a sentence painted him as a "depraved supervillain," Bloomberg reported.
The lightest sentence was appropriate, Bankman-Fried claimed, because the "most reasonable estimate of loss" and "harm" to customers, lenders, and investors is "zero."
According to Ray, "Bankman-Fried continues to live a life of delusion." While Ray's team continues to work to recover funds lost, which has been estimated around $10 billion, the total amount of stakeholder claims filed is $23.6 quintillion dollars.
"One quintillion is one billion billions," Ray told Kaplan. "It is the number 1 followed by 18 zeros. The task of addressing filed claims and reducing them to their proper and 'allowed' amount is monumental. Mr. Bankman-Fried assumes this is a breeze. He is wrong, very wrong."
In one of the letter's most heated moments, Ray explained why Bankman-Fried is also wrong to claim that FTX is "solvent and safe":
Vast sums of money were stolen by Mr. Bankman-Fried, and he was rightly convicted by a jury of his peers. That things that he stole, things he converted into other things, whether they were investments in Bahamas real estate, cryptocurrencies or speculative ventures, were successfully recovered through the enormous efforts of a dedicated group of professionals (a group unfairly maligned by Mr. Bankman-Fried and his supporters) does not mean that things were not stolen. What it means is that we got some of them back. And there are plenty of things we did not get back, like the bribes to Chinese officials or the hundreds of millions of dollars he spent to buy access to or time with celebrities or politicians or investments for which he grossly overpaid having done zero diligence. The harm was vast. The remorse is nonexistent.
Ray appears to be frustrated that Bankman-Fried chose to blame his team currently leading FTX and managing bankruptcy claims, as well as lawyers—labeling them as "enemies"—to dodge responsibility for FTX crimes.
Those crimes include: wire fraud on customers of FTX, conspiracy to commit wire fraud on customers of FTX, wire fraud on lenders to Alameda Research, conspiracy to commit wire fraud on lenders to Alameda Research, conspiracy to commit securities fraud on investors in FTX, conspiracy to commit commodities fraud on customers of FTX in connection with purchases and sales of cryptocurrency and swaps, and conspiracy to commit money laundering.
"Bankman-Fried was willing to consider any narrative, including wildly conflicting narratives, that could potentially save him from this day of reckoning," Ray told Kaplan.
Conflicting narratives Bankman-Fried considered were either focusing "exclusively on the fact" that he "could give value back to customers," and "the Chapter 11 team is destroying it" or "go strong with the message" that "I'm really glad the Chapter 11 team has stepped in, they're great, and even better I have funding that can help make customers more whole while the Chapter 11 team does what is needed to clean things up."
Instead of being "enemies" stopping FTX customers from clawing back all the funds stolen, Ray told Kaplan that his team "worked tirelessly in the months following the collapse to institute governance, controls, and to preserve and protect assets."
"The value we hope to return to creditors would not exist without the tens of thousands of hours that dedicated professionals have spent digging through the rubble of Mr. Bankman-Fried's sprawling criminal enterprise to unearth every possible dollar, token, or other asset that was spent on luxury homes, private jets, overpriced speculative ventures, and otherwise lost to the four winds," Ray told Kaplan, adding that "achieving anticipated recovery levels" that Bankman-Fried suggested all FTX victims are expecting is actually "by no means assured."
"I am quite confident that but for the work of a very large team of dedicated individuals, billions of dollars would have been lost or stolen and the recoveries to customers would be a fraction of their expected recovery," Ray told Kaplan. "I make this statement not to curry sympathy or thanks, but to accurately report on the reasons why the FTX debtors may soon be in a position to compensate victims for some of the losses caused by Mr. Bankman-Fried."
CEO: Five times SBF lied to reduce sentence
Ray broke down for Kaplan every time that Bankman-Fried allegedly misled the court in order to push for a lighter sentence.
SBF “falsely” claimed FTX customers should “get back all their money”
In his sentencing memo, Bankman-Fried cites 14 lines of a transcript from a January hearing before the Bankruptcy Court. Bankman-Fried claimed that this snippet of the hearing showed that "debtors' counsel in the consolidated FTX and Alameda bankruptcy proceeding stated in summary that customers and creditors who can prove their losses are expected to get back all their money."
Ray alleged that Bankman-Fried offered Kaplan a "reckless" misinterpretation of this hearing.
"Victims will never be returned to the same economic position they would have been in today absent his colossal fraud," Ray told Kaplan. "Even the best conceivable outcome in the Chapter 11 proceeding will not yield a true, full economic recovery by all creditors and non-insider equity investors as if the fraud never happened."
"When I took over as CEO, there were only 105 bitcoins left on the FTX.com exchange, against customer entitlements of nearly 100,000 bitcoins," Ray wrote. "Why were the bitcoins missing? A jury has concluded beyond a reasonable doubt that Mr. Bankman-Fried stole them and converted them into other things. For that reason, they are not available to be returned in-kind to his victims."
Bankman-Fried also ignores that "any material return to stockholders" who purchased $2 billion in preferred stock and over $100 million in common stock—"is highly unlikely," Ray said.
SBF “falsely” claimed he could recover more value
Bankman-Fried claimed that he could help FTX customers and creditors recover more value than the team behind the Chapter 11 bankruptcy petitions that Bankman-Fried "contends should never have happened," Ray said.
But these Chapter 11 petitions "helped stop the damage brought about by the disastrous collapse caused by Mr. Bankman-Fried crimes," Ray said, and secured relief, without which "recovery rates would have been substantially lower."
"There should be no delusion that because assets have increased in value or that the professionals have been able to recover funds and assets taken or stolen from the estate, that there was no need for the Chapter 11 cases," Ray told Kaplan. "It is because of the Chapter 11 cases that we had assets which could rebound in value, and the court process that allowed the estate to chase wrongdoers that now enables the distribution of monies to customers."
SBF “actively worked to hinder” recovery of stolen assets
Ray alleged that after Bankman-Fried adopted the strategy of attacking the Chapter 11 team, the FTX founder "actively worked to hinder the preservation of assets by, for example, transferring assets to the Bahamas as part of his self-professed strategy to win a battle to deprive the Bankruptcy Court of jurisdiction and by requesting reinstatement of his credentials to access the FTX systems."
According to Ray, "This is in stark contrast to the often repeated theme that if only we would have engaged with Mr. Bankman-Fried, the creditors would have been better off. Only by cutting off Mr. Bankman-Fried was the Chapter 11 team able to stop the bleeding. Of this, I have no doubt."
SBF’s effective altruism was a “lie”
Bloomberg described Bankman-Fried as "a champion of effective altruism," where people's choices are judged by how much good they cause in the world.
His ex-girlfriend, former Alameda Research CEO Caroline Ellison, testified that Bankman-Fried's beliefs made him more inclined to risk-taking.
"Bankman-Fried once spoke of a coin-flip scenario where if the coin landed on tails, the world would end," Ellison told Kaplan. "But if the coin landed on heads, 'the world would be twice as good,'" which is why he told her that "he would take the bet if there were a chance of making the world better."
Bankman-Fried has suggested that his crimes have caused no harm, showing no remorse for victims who "will never be in the same position they would have been had they not crossed paths with Mr. Bankman-Fried and his so-called brand of 'altruism,'" Ray said.
"Effective altruism, at least as lived by Samuel Bankman-Fried, was a lie," Ray told Kaplan.
SBF’s victims continue to suffer
Whether or not Bankman-Fried is a supervillain or a do-gooder matters because with decades between the plaintiff's and defendants' recommended prison terms, Kaplan's opinion of Bankman-Fried could meaningfully impact sentencing.
While Bankman-Fried has told the court to reduce his sentence because no harm was caused, Ray told Kaplan that victims are still suffering from vast fraud directed by Bankman-Fried.
Bankman-Fried's sentencing is scheduled for March 28, and Bankman-Fried has asked Kaplan to consider factors beyond his crimes, "including Sam’s charitable works and demonstrated commitment to others."
"A sentence that returns Sam promptly to a productive role in society would be sufficient," Bankman-Fried's sentencing memo said.
But Ray painted a different picture of his FTX predecessor, telling Kaplan that "FTX was run for its very short existence by Mr. Bankman-Fried with hubris, arrogance, and a complete lack of respect for the basic norms of the law, which is all the more inexcusable given his privileged upbringing."
Rather than consider Bankman-Fried's charitable work, Kaplan should give more weight to considering ongoing harms still hurting FTX victims, Ray said.
"Make no mistake; customers, non-governmental creditors, governmental creditors, and non-insider stockholders have suffered and continue to suffer," Ray said.