The public prosecutor had requested imprisonment for a period ranging from 40 to 50 years. “His life over the past few years has been characterized by unparalleled greed and arrogance, by ambition and self-justification, risk-taking and frequent playing with other people’s money,” she wrote in her explanation.
Bankman-Fried's lawyers had proposed a prison term of approximately six years. Your client is in no way the “super villain” described by the prosecution. The prison sentence required was “medieval.” They also noted that FTX customers got a significant portion of their money back.
Judge Lewis Kaplan did not accept this argument: “A thief who brings his loot to Las Vegas and successfully bets the stolen money is not entitled to a sentence reduction by using his Las Vegas winnings to repay the stolen money.” If Judge Kaplan had exhausted the proposed sentences on all counts, he would have sentenced him to more than 100 years in prison.
Bankman-Fried apologized to former employees
In a statement, Bankman Fried apologized to his former employees: “I am sorry for what happened. There were things I should have done and said, and things I shouldn't have done.” The jury found that it was proven that Bankman Fried stole eight billion dollars (about 7.4 billion euros) of clients' money just for that. He embezzled greed for Speculating and financing his lavish lifestyle. Although he admitted that there were mistakes in the process, he rejected accusations of fraud several times.
He also announced that he would appeal the ruling and the amount of the penalty. In addition to Bankman-Fried, his parents, university professors Joseph Bankman and Barbara Freed, attended Thursday's hearing.
During the reference trial, the defense portrayed Bankman-Fried as a hard-working, well-intentioned businessman who made mistakes. In addition to the damaging statements made by his former associates, the prosecution presented sobering evidence such as timestamps from Google files that convinced jurors that Bankman-Fried – contrary to his claims – must have known about the fraud.
The cryptocurrency exchange will collapse in 2022
Bankman-Fried is celebrated with FTX, one of the largest cryptocurrency trading sites. The company is now valued at $32 billion. Many celebrities, including football star Tom Brady, have promoted FTX. Bankman Fried has defended cryptocurrency as a serious investment.
In November 2022, the exchange collapsed when FTX could no longer handle a wave of customer withdrawals. Attempts to rescue other cryptocurrency exchanges have failed and the machinations are increasingly exposed. It was revealed that FTX used client funds to support cryptocurrency investment fund Alameda Research, which was also founded by Bankman-Fried. He made risky trades and borrowed money from FTX.
In fact, collateral should have been deposited for such transactions. There were also computer systems that were supposed to take care of this. However, the program contained a secret exception for Alameda. This allowed the hedge fund to go as deep as it wanted into FTX. Bankman-Fried reportedly transferred about $14 billion (about €13.3 billion) of FTX client funds to Alameda Research.
His ex-girlfriend as a key witness
Several former partners of the crypto entrepreneur testified against him, including FTX co-founder Gary Wang, software chief Nishad Singh and Bankman-Fried's ex-girlfriend and Alameda president Carolyn Ellison. They said they committed the fraud at the direction of Bankman-Fried.
Bankman-Fried told the court that he had only a partial understanding of the financial situation of his companies. He was “very surprised” by the extent of the problems when he learned in October 2022 that Alameda Research had $8 billion in debt to FTX.
The main witness, Ellison, stated during her interview that Bankman-Fried ordered her to “commit these crimes.” He himself “created the system” through which client funds flowed from FTX to Alameda Research. The money was used for “investments and debt repayment.” Ellison also accused Bankman-Fried of pressuring her to provide lenders with a misleading financial statement for Alameda.
