Sam Bankman-Fried, the billionaire founder of FTX cryptocurrency exchange, has been sentenced to 25 years in prison for embezzling $8 billion from customers of the now-defunct exchange.
FTX Exchange was a leading centralised cryptocurrency exchange which collapsed due to due to mismanagement of funds, lack of liquidity and the large volume of withdrawals. It was founded by Bankman-Fried and Gary Wang.
In a Manhattan court hearing, US District Judge Lewis Kaplan sentenced the 32-year-old after dismissing his claim that FTX customers didn't suffer losses, reported Reuters.
Bankman-Fried was found guilty by a jury on November 2 for seven fraud and conspiracy charges related to FTX's collapse in 2022, which prosecutors dubbed as one of the largest financial frauds in US history.
"He knew it was wrong," Kaplan said. "He knew it was criminal. He regrets that he made a very bad bet about the likelihood of getting caught. But he is not going to admit a thing, as is his right."
During a court session, Bankman-Fried acknowledged the suffering of FTX customers and extending an apology to his former colleagues, but stopped short of confessing to any criminal actions. He has expressed his intention to appeal both his conviction and the sentence.
"There are serious consequences for defrauding customers and investors," US Attorney General Merrick Garland said in a statement. "Anyone who believes they can hide their financial crimes behind wealth and power, or behind a shiny new thing they claim no one else is smart enough to understand, should think twice."
Kaplan noted that FTX customers faced an $8 billion loss, while equity investors in FTX lost $1.7 billion, and lenders to Bankman-Fried's Alameda Research hedge fund lost $1.3 billion.
Consequently, he issued an $11 billion forfeiture order and granted authorisation for the government to compensate victims using seized assets.
Bankman-Fried said, "Customers have been suffering ... I didn't at all mean to minimize that. I also think that's something that was missing from what I've said over the course of this process, and I'm sorry for that."
He added, "They put a lot of themselves into it, and I threw that all away. It haunts me every day."
Three former associates testified for the prosecution, stating that Bankman-Fried instructed them to use FTX customer funds to cover losses at Alameda Research. All three have admitted guilt to fraud charges.
Bankman-Fried has been held at the Metropolitan Detention Center in Brooklyn since August 2023.
Judge Kaplan revoked his bail after suspecting he tampered with witnesses on multiple occasions. Kaplan mentioned he would suggest placing Bankman-Fried in a prison near San Francisco.
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