Sam Bankman-Fried to be sentenced for multibillion-dollar FTX fraud

Sam Bankman-Fried, the founder of bankrupt cryptocurrency exchange FTX, arriving at court on August 11 2023. File photo.
Sam Bankman-Fried, the founder of bankrupt cryptocurrency exchange FTX, arriving at court on August 11 2023. File photo.

Sam Bankman-Fried, the former billionaire cryptocurrency wunderkind, is to be sentenced on Thursday after his conviction for stealing $8bn (R152.46bn) from customers of the now bankrupt FTX exchange he founded.

Bankman-Fried, 32, faces the prospect of decades behind bars after a jury found him guilty in November on seven fraud and conspiracy counts. His sentencing is due to start at 3.30pm, SA time, (1.30pm GMT) before US district judge Lewis Kaplan in Manhattan.

The hearing will mark the culmination of Bankman-Fried's downfall from an ultra wealthy cryptocurrency entrepreneur and major political donor to US authorities' biggest trophy to date in a crackdown on malfeasance in digital asset markets. He faces a statutory maximum of 110 years but is likely to receive less. Prosecutors are seeking a prison sentence of 40 to 50 years for what they say was one of the biggest financial frauds in US history.

“His life in recent years has been one of unmatched greed and hubris; of ambition and rationalisation and courting risk and gambling repeatedly with other people's money,” the US Attorney's office in Manhattan, which charged Bankman-Fried in December 2022, wrote in a March 15 sentencing memorandum. Bankman-Fried's defence lawyer Marc Mukasey urged Kaplan to give him far less time, arguing that a sentence of less than five-and-a-quarter years would be appropriate.

Mukasey said FTX customers were likely to be made whole in the bankruptcy process and Bankman-Fried worked diligently after the exchange's November 2022 collapse to recover funds.

“The memorandum distorts reality to support its precious 'loss' narrative and casts Sam as a depraved super villain,” Mukasey wrote in a March 19 court filing, referring to prosecutors' sentencing proposal.

Several FTX customers have written to Kaplan expressing dismay that they will be compensated based on the value of their cryptocurrency at the time of FTX's bankruptcy, rather than the higher levels at which those assets trade today.

Bankman-Fried has vowed to appeal his conviction and sentence.

A Massachusetts Institute of Technology graduate, Bankman-Fried rode a boom in the values of bitcoin and other digital assets to a net worth of $26bn (R495.50bn), according to Forbes magazine, before he turned 30.

Bankman-Fried became known for his mop of unkempt curly hair and commitment to a movement known as effective altruism, which encourages talented young people to focus on earning money and giving it away to worthy causes.

He was one of the biggest contributors to Democratic candidates and causes before the 2022 US midterm elections.

But prosecutors say the responsible image he cultivated concealed his years-long embezzlement of customer funds.

At trial, three of his former close associates testified he directed them to use FTX customer funds to plug losses at his crypto-focused hedge fund, Alameda Research.

Bankman-Fried testified in his own defence that he made mistakes, such as not implementing a risk management team, but denied he intended to defraud anyone or steal customers' money.

In their sentencing memorandum, prosecutors said Bankman-Fried could commit fraud again if released at a young age.

They pointed to his personal writings in the weeks after FTX's collapse, in which he mused about options for restoring his image such as “come out against the woke agenda” or pushing the idea that “SBF died for our sins”.

“It is realistic that he will settle on a narrative, lean into it and convince other people to part with their money based on lies and the promise of false hope,” prosecutors wrote.


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