cryptocurrencies

FTX founder Sam Bankman-Fried has been sentenced to 25 years in prison for massive fraud and conspiracy related to his cryptocurrency exchange and a related hedge fund.

“I built something very beautiful and threw it all away”, Bankman-Fried said of his FTX colleagues. “It haunts me every day. It was excruciating to watch it all unfold,” he said. “Customers do not deserve this level of pain. I was the CEO of FTX and I was in charge”he emphasized.

It fell flat

Bankman faced a maximum possible sentence of 110 years in prison under federal sentencing guidelines for the massive fraud conspiracy that led to the collapse of FTX and a related hedge fund.

However, federal prosecutors recommended that he be sentenced to 40 to 50 years in prison, while defense attorneys requested a sentence of 5 to 6.5 years.

Judge Lewis Kaplan found the 32-year-old guilty of seven charges and held him responsible for the estimated $10 billion in lost customer deposits in 2022.

The charges included bank fraud and conspiracy to commit bank fraud against FTX clients and against lenders at sister hedge fund Alameda Research, conspiracy to commit securities fraud and conspiracy to commit commodities fraud against FTX investors, and conspiracy to commit money laundering .

Manhattan District Attorney Damian Williams said Bankman-Fried masterminded “one of the largest financial frauds in American history.”

Jurors reached their verdict after about three hours of deliberations.

Bankman-Fried plans to appeal his conviction and sentence.

These are the 12 jurors who decided Bankman-Fried’s fate:

• A man, 68, who worked as a banker at Salomon Brothers, which became part of Citigroup Inc. in 1998. He received his MBA from Stanford University, where Bankman-Fried’s parents are both law professors.
• A woman, 39, who worked as a physician’s assistant and who was once a missionary in the Dominican Republic. She lives with her husband, who is a programmer.
• A female, 40, unemployed social worker who earned a degree from Princeton University and went to Columbia University and New York University.
• A woman, 50, who works as a train driver at Metro North. He has five children, two of whom have previously been convicted of crimes.
• A woman, 33, who went to the State University of New York, Binghamton, and now works as a pediatric nurse in Westchester County.
• A man, 59, who didn’t say what he did for work, but said his company was being sued by another company.
• A woman, 38, a graduate of Duke University who sits on the board of directors of a non-profit organization. She is divorced with two children and lives with her partner, who is a professor at New York University.
• A woman who works at a school in the Bronx. She earned a bachelor’s degree from the University of Buffalo, lives with her older sister and cares for her mother. She has a short haired cat.
• A female, 65, retired prison officer married to a retired construction worker with three grown children.
• A male, 61 years old, US Postal Service employee.
• A woman, who works in advertising. She is divorced and has an 18-year-old daughter and a 12-year-old son.
• A woman, 55, who works as a special education teacher in Rockland County. He is from Bermuda. She is divorced with three children.

From success to decline

By mid-2022 Sam Bankman Fried was living his dream. The FTX cryptocurrency exchange he had founded was enjoying moments of glory, and he himself had become a billionaire – with a personal fortune then estimated at $20 billion – even presenting the profile of a frugal philanthropist who wanted to share a large part of his profits with the world.

In 2022 the then $32 billion FTX in which users could easily trade various cryptocurrencies such as Bitcoin and Ethereum collapsed within days. His clients and investors from around the world watched in shock as the former crypto titan was arrested in the Bahamas where he had taken refuge and faces a dozen federal charges.

FTX customers, investors and employees were shocked to learn that $8.9 billion of customer funds were lost from the exchange – but not as much of a shock as the latter who lost the most. It was the beginning of the end for many participants in the crypto market after the FTX cannon hit a critical blow for confidence in the industry. In fact, former US Treasury Secretary Lawrence Summers had then compared the collapse of FTX to that of the energy company Enron Corp.

Billion hole

FTX which was one of the most well-known cryptocurrency exchanges and is now under independent management, filed for bankruptcy in mid-November 2022 when an $8 billion hole appeared in its balance sheet. Soon after FTX went bankrupt as within a short period of time it had huge withdrawals as its customers were worried about the developments.

On December 13, 2022, Sam Banken Freed was arrested in the Bahamas at the request of US authorities. The indictment was serious as it involved wire fraud, conspiracy to commit fraud, securities fraud, conspiracy to commit securities fraud and money laundering. He had remained in the Bahamas since his company filed for bankruptcy, having moved FTX’s headquarters to Nassau, the islands’ capital, from Hong Kong in 2021.

The lost $2 billion

The founder of FTX has been accused by US authorities of “running” a multi-year scheme to defraud investors, with the US Securities and Exchange Commission accusing Bankman Fried of taking more than $2 billion from investors and concealing the extent of the relationship between FTX and a of his other company, Alameda Research, which is a cryptocurrency hedge fund controlled by the defendant. At the time there had been accusations that FTX had borrowed billions of dollars from client assets to fund speculative investments by Alameda Research.

Who is Sam Bankman Fried

Defendant was born in Stanford, California in March 1992. His parents were law professors at the university, and from a young age he was interested in altruism, a philosophy that holds that the best action is that which produces the greatest happiness for the greatest number of people.

He studied physics and mathematics at the Massachusetts Institute of Technology, MIT, where he graduated in 2014. He started investing in cryptocurrencies and in 2017 founded Alameda Research, his first company. Within months of founding Alameda Research, he was buying and selling very large amounts of bitcoin every day. In April 2019, he founded FTX, which has grown rapidly thanks to capital investment from various venture capital firms such as SoftBank and Pantera Capital, according to Enterpreneur magazine.