© Reuters. FILE PHOTO: Sam Bankman-Fried, the founder of bankrupt cryptocurrency exchange FTX, arrives at court as lawyers push to persuade the judge overseeing his fraud case not to jail him ahead of trial, at a courthouse in New York, U.S., August 11, 2023. REUTER
By Luc Cohen
NEW YORK (Reuters) – Sam Bankman-Fried should spend between 40 and 50 years in prison after being convicted for stealing $8 billion from customers of his now-bankrupt FTX cryptocurrency exchange, prosecutors said on Friday.
A jury found Bankman-Fried, 32, guilty in November on seven counts of fraud and conspiracy. Federal prosecutors in Manhattan said “thousands of everyday people” including residents of war-torn and unstable countries had entrusted their nest eggs to FTX.
“Even now Bankman-Fried refuses to admit what he did was wrong,” prosecutors wrote in a sentencing memorandum. “His life in recent years has been one of unmatched greed and hubris; of ambition and rationalization; and courting risk and gambling repeatedly with other people’s money.”
A spokesman for the former billionaire, Mark Botnick, declined to comment. Bankman-Fried’s lawyers told U.S. District Judge Lewis Kaplan that a 5-1/4 to 6-1/2 year prison term would be appropriate. They said FTX clients would get most of their money back, and that Bankman-Fried did not set out to steal.
Kaplan is scheduled to sentence Bankman-Fried on March 28 in Manhattan federal court. Bankman-Fried plans to appeal his conviction and sentence.
Bankman-Fried is the son of two Stanford Law School professors. A graduate of the Massachusetts Institute of Technology, Bankman-Fried worked on Wall Street before riding a boom in the values of digital assets such as bitcoin to a net worth Forbes magazine once estimated at $26 billion.
His fortune evaporated in November 2022, when FTX declared bankruptcy after a wave of customer withdrawals.
In their sentencing memorandum on Friday, prosecutors pointed to his privileged upbringing and elite education as reasons he should face an especially harsh sentence.
“He knew what society deemed illegal and unethical, but disregarded that based on a pernicious megalomania guided by the defendant’s own values and sense of superiority,” they wrote.
At his trial, three former close associates testified that Bankman-Fried directed them to loot FTX customer funds to plug losses at his Alameda Research hedge fund, while portraying himself publicly as a responsible steward in the volatile cryptocurrency market.
Prosecutors said Bankman-Fried also used customer funds to buy luxury real estate in the Bahamas and to donate to U.S. politicians who might support cryptocurrency-friendly regulations.
Bankman-Fried testified that he did not realize how much Alameda owed to FTX until shortly before both failed. His trial lasted one month.
In a letter to Kaplan, Bankman-Fried’s parents said their son took responsibility for the errors that led to FTX’s collapse, and worked hard before his arrest to help recover customers’ money.
Bankman-Fried was arrested in December 2022 in the Bahamas, where FTX was based, and extradited to the United States that month.
He has been jailed at Brooklyn’s Metropolitan Detention Center since August, when Kaplan revoked his bail after finding that he likely tampered with witnesses.
