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Sam Bankman-Fried sentenced to 25 years in prison

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NEW YORK — A federal judge sentenced former cryptocurrency mogul Sam Bankman-Fried to 25 years in prison Thursday, less than what prosecutors wanted for what they called his “massive” financial crimes, but far more than defense lawyers sought. He was also ordered to pay more than $11 billion.

Bankman-Fried, co-founder of crypto exchange FTX and investment fund Alameda Research, failed to take responsibility for the disaster he created, U.S. District Judge Lewis Kaplan said in handing down the sentence. “Mr. Bankman-Fried says mistakes were made … but never a word of remorse for the commission of terrible crimes,” Kaplan said.

Jurors in November convicted Bankman-Fried on charges related to wire fraud, conspiracy to commit fraud and conspiracy to commit money laundering. He was accused of misappropriating FTX customer funds to spend lavishly on luxury real estate, investments and political donations.

Before Kaplan handed down the sentence, Bankman-Fried gave a meandering account of events in an attempt to justify some of his actions. “I made a series of bad decisions,” said Bankman-Fried, who spoke for roughly 20 minutes. “They weren’t selfish decisions. … They were bad decisions.”

Prosecutors had argued that a sentence of at least 40 years in prison would fit a case they described as one of the biggest financial crimes in history. Defense attorneys argued that a sentence of five to six years would be more appropriate for a young man with autism who wanted to use some of his money for charity.

The chance that Bankman-Fried could commit other crimes weighed into the sentencing decision, Kaplan said.

“There is a risk this man will be in a position to do something very bad in the future and it’s not a trivial risk,” the judge said. “Not a trivial risk at all.”

Bankman-Fried, 32, turned FTX into a behemoth, with a Super Bowl ad, naming rights to a Miami stadium and glowing publicity for its cryptocurrency exchange. Only when it collapsed into bankruptcy in 2022 did investigators uncover what prosecutors have described as a straightforward fraud dressed up as a breakthrough financial innovation.

Bankman-Fried and his top deputies, prosecutors said, took customers’ money out of FTX and put it into Alameda Research. At the trial, former Alameda CEO Caroline Ellison, who pleaded guilty to conspiracy charges before cooperating with prosecutors, described Bankman-Fried telling her to use FTX funds.

“It’s hard to understand in some ways how a person can be responsible for all of these significant crimes,” prosecutor Nicolas Roos said Thursday. “It’s massive in its scale. It was pervasive in all aspects.”

Before Roos spoke, defense lawyer Marc Mukasey argued that Bankman-Fried did not have harmful intentions.

“Sam was not a ruthless financial serial killer who set out every morning to hurt people,” Mukasey said Thursday. He described Bankman-Fried as a person who “doesn’t make decisions with malice in his heart. He makes decisions with math in his head.”

Kaplan spoke of the financial devastation to victims who invested their life savings in their accounts on the FTX platform. In court filings, Bankman-Fried’s lawyer had argued that victims are likely to be made whole once the FTX bankruptcy process shakes out, a claim that John Ray III, who is leading the company through the bankruptcy process as CEO, criticized in a letter to the court. The defense’s assertion that FTX customers and investors suffered no harm is “callously and demonstrably false,” Ray wrote.

Ahead of Thursday’s hearing, some trial observers wondered whether the Justice Department overreached in asking for at least 40 years in prison. A full recovery of FTX assets could undercut prosecutors’ assertion of “dramatic devastating personal loss” for investors, said Martin Auerbach, a defense lawyer who has been involved in cryptocurrency cases but did not work on Bankman-Fried’s case.

“That is part of the theory for why he should be punished,” Auerbach said before the hearing. “If that will turn out not to be correct because those small investors have been made whole or recovered much of their money, I think the judge has the discretion to say, ‘I’m going to look at the loss in a different way.’”

But Bankman-Fried’s prison term will set an important example, said Sheila Warren, CEO of the trade group Crypto Council for Innovation. “This sentencing is crucial,” Warren said. “What we don’t want to do is incentivize people to say, ‘Oh, you just pay a big fine and do whatever you want.’ No, you go to jail if you lie, if you steal.”

She said she faulted not just Bankman-Fried, but also the many people who lionized him instead of questioning whether he was honest. “There were a lot of institutions that were supporting this kind of wunderkind mythology,” she said.

This is a developing story and will be updated.

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