March 28 (UPI) — FTX founder Sam Bankman-Fried was sentenced to 25 years in prison on Thursday after he was found guilty on fraud charges related to the downfall of the failed cryptocurrency exchange.
Bankman-Fried, 32, appeared in a Manhattan court, where Judge Lewis Kaplan delivered the sentence.
“This was a very serious crime,” Kaplan said as Bankman-Fried stood before him.
Kaplan ultimately decided the 40-50 years the prosecutors recommended was too harsh but indicated the 25-year sentence was meant to “disable him” from committing another fraud for a long time.
Bankman-Fried said what he did haunts him.
In a victim statement in court on behalf of 200 victims, London-based investor Sunil Kavuri said Bankman-Fried’s victims have suffered much more, including some who have taken their own lives.
“As a result of his unprecedented fraud, Bankman-Fried faces 25 years in prison and forfeiture of over $11 billion. Today’s sentence will prevent the defendant from ever again committing fraud and is an important message to others who might be tempted to engage in financial crimes that justice will be swift, and the consequences will be severe,” U.S. Attorney Damian Williams said,
According to former federal prosecutor Mitchell Epner, while there is no parole in federal cases, there is time off with good behavior. So Bankman-Fried may serve as little as 12.5 years “if he gets all of the jailhouse credit available to him.”
Non-violent inmates can get as much as a 50% sentence reduction under the First Step Act prison reform legislation. Epner said while that law was intended to help minority offenders, the law has proven to be “an enormous boon for white-collar criminal defendants.”
Kaplan called comments from the defense that victims of Bankman-Fried’s fraud could well be repaid speculative.
“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 all or part of which he stole when he finally gets caught,” Kaplan said.
He was convicted in November on two wire fraud conspiracy counts, two counts of wire fraud, one money-laundering conspiracy count, plus commodities fraud conspiracy and conspiracy to commit securities fraud.
The wire fraud and money laundering charges each carried a maximum sentence of 20 years in prison, while the other charges carry a maximum sentence of five years each.
Prosecutors called for 40 to 50 years in prison, saying FTX customers lost a total of $8 billion, while FTX equity investors lost more than $1 billion. Lenders to Alameda, Bankman-Fried’s hedge fund, also lost more than $1 billion.
Prosecutors pointed out that Bankman-Fried’s victims include people who deposited their retirement funds with his company and people who lost their entire life savings.
Bankman-Fried, they said, “victimized tens of thousands of people and companies, across several continents, over a period of multiple years.”
“He stole money from customers who entrusted it to him, he lied to investors, he sent fabricated documents to lenders, he pumped millions of dollars in illegal donations into our political system, and he bribed foreign officials. Each of these crimes is worthy of a lengthy sentence,” prosecutors added.
Prosecutors said the lengthy sentence would have been justified, arguing in a court document that Bankman-Fried has “never accepted responsibility for what he has done.”
“At no point has he shown any willingness to admit culpability for fraud and deceit or show genuine remorse for his conduct,” they said.
After he was found guilty, attorney Mark S. Cohen said in a statement that Bankman-Fried “maintains his innocence” and would continue to fight the charges.
The defense urged Kaplan to sentence Bankman-Fried to a range of 63 to 78 months because they argue victims may be able to get most of the lost money back.
Bankruptcy attorney Andrew Dietderich said that while there is still a lot of work and risk to get all money back to victims, the team leading the FTX bankruptcy estate has a “strategy to achieve it.”
Citing a Delaware court filing, CNBC reported the FTX estate reached an agreement this week to sell a stake in artificial intelligence company Anthropic for $884 million.
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