Sam Bankman-Fried on Thursday was sentenced to 25 years in prison, a year and a half after his crypto startup, FTX, imploded practically overnight and set off a massive a federal investigation.
The outcome was not a huge surprise — a prison sentence was all but guaranteed after a jury found Bankman-Fried guilty on seven counts of fraud and conspiracy in November. The only unknown going into court this morning was just how long his sentence would be, a decision that was in the hands of Judge Lewis Kaplan.
Here are the key takeaways from Thursday’s hearing.
Bankman-Fried’s 25-year sentence is about half of the 40 to 50 years prosecutors had sought. Judge Kaplan said he weighed a number of factors, including the brazenness of the crimes and Bankman-Fried’s potential to commit crimes in the future.
There was a risk “that this man will be in a position to do something very bad in the future,” Kaplan said. “And it’s not a trivial risk.”
Kaplan recommended that the Bureau of Prisons place Bankman-Fried in a medium-security or lower facility, ideally in the San Francisco area so that his family may visit.
While there is no parole in federal cases, inmates can still shave time off their sentences for good behavior. Bankman-Fried could end up serving “as little as 12.5 years, if he gets all of the jailhouse credit available to him,” Mitchell Epner, a former federal prosecutor, told CNN.
Bankman-Fried addressed the court before his sentence was revealed, offering an at times meandering statement about the mistakes he made as CEO of FTX.
He commended his former business partners, including co-founder Gary Wang and his ex-girlfriend Caroline Ellison, both of whom testified against him in trial in compliance with their plea agreements.
Together, they all “built something beautiful,” Bankman-Fried said.
“And I threw it all away,” he added. “It haunts me every day.”
Judge Kaplan appeared unmoved by parts of Bankman-Fried’s apology about customers being hurt. Kaplan later acknowledged Bankman-Fried’s apology but added Bankman-Fried said “never a word of remorse for the commission of terrible crimes.”
Kaplan also ordered Bankman-Fried to forfeit $11 billion, including properties and other assets acquired with stolen customer funds.
The forfeiture is intended to be paid over time, and Bankman-Fried will likely be required to hand over all of his available assets, plus a nominal sum every month.
“The forfeiture will follow him for the rest of his life,” Epner said. “It would take the vast majority of what he makes after he gets out of jail.”
He ruled Bankman-Fried’s forfeited assets can be used to help fund the repayment of victims of the FTX collapse.
Judge Kaplan roundly rejected Bankman-Fried’s argument that there was no loss to former customers of FTX because the bankruptcy estate indicated those victims are poised to recoup most of their funds.
To say that FTX customers and creditors will be paid in full “is misleading, it is logically flawed, it is speculative,” Kaplan said.
FTX is now in the hands of corporate restructuring expert John J. Ray III, who oversaw the liquidation of Enron in the early 2000s. Ray has stated in a letter to the court that the company Bankman-Fried left behind was “neither solvent nor safe,” and that any recovered assets would be thanks to the diligence of his team’s work over the past 18 months.
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