Sam Bankman-Fried, the founder of the FTX cryptocurrency exchange who was convicted of stealing billions of dollars from customers, was sentenced to 25 years in prison on Thursday, capping an extraordinary saga that upended the crypto industry and became a cautionary tale of greed and hubris.
Mr. Bankman-Fried’s sentence was shorter than the 40 to 50 years that federal prosecutors had sought after a jury found him guilty of fraud, conspiracy and money laundering — charges that carried a maximum penalty of 110 years behind bars. But the punishment was far above the six and a half years requested by his defense lawyers.
Mr. Bankman-Fried, 32, did not visibly react as the sentence was handed down by Judge Lewis A. Kaplan at the Federal District Court in Manhattan. His parents, the law professors Joe Bankman and Barbara Fried, sat two rows from the front, staring at the floor.
“He knew it was wrong, he knew it was criminal,” Judge Kaplan said of Mr. Bankman-Fried’s actions.
Before the sentence was delivered, Mr. Bankman-Fried, clean shaven and wearing a loose-fitting brown jail uniform, apologized to FTX’s customers, investors and employees.
“A lot of people feel really let down, and they were very let down,” he said. “I’m sorry about that. I’m sorry about what happened at every stage.” He added that his decisions “haunt” him every day.
Mr. Bankman-Fried was also ordered to forfeit $11.2 billion in assets.
At the sentencing, Judge Kaplan pointed to testimony from Mr. Bankman-Fried’s trial that showed the FTX founder’s extreme appetite for risk, saying it was his “nature” to make colossally dangerous bets. He also said Mr. Bankman-Fried had lied on the witness stand and failed to take responsibility for his crimes.
“He regrets that he made a very bad bet about the likelihood of getting caught,” Judge Kaplan said. “But he’s not going to admit a thing.”
Judge Kaplan said Mr. Bankman-Fried would be sent to a low- or medium-security prison and requested a location near the San Francisco Bay Area, where his parents live. Mr. Bankman-Fried has been held at the Metropolitan Detention Center in Brooklyn since August.
The sentencing signified the finale of a sweeping fraud case that exposed the rampant volatility and risk-taking across the loosely regulated world of cryptocurrencies. In November 2022, FTX imploded virtually overnight, erasing $8 billion in customer savings. At a trial last fall, he was convicted of seven counts of fraud, conspiracy and money laundering.
His sentence ranks as one of the longest imposed on a white-collar defendant in recent years. Bernie Madoff, who orchestrated a notorious Ponzi scheme that unraveled during the 2008 financial crisis, received a 150-year sentence in 2009. He was in his 70s at the time and died 12 years later. Elizabeth Holmes, who was convicted of defrauding investors in her blood-testing startup, Theranos, was sentenced to 11 years and three months in 2022.
A representative for Mr. Bankman-Fried declined to comment.
Ira Lee Sorkin, the defense lawyer who represented Mr. Madoff, said he was not surprised Mr. Bankman-Fried got a stiff sentence, albeit a shorter one than his own client.
“He is 32 years old and he will see the light of day,” he said of Mr. Bankman-Fried. “But he is going to spend a lot of time in a cell.”
Just 18 months ago, Mr. Bankman-Fried was a corporate titan and one of the youngest billionaires on the planet. With his face plastered on billboards and magazine covers, he could raise money seemingly at will. He hobnobbed with actors, musicians and superstar athletes, cultivating an image as a nerdy do-gooder who intended to donate all his wealth to charity.
Based in the Bahamas, FTX was one of the largest marketplaces for cryptocurrencies — an easy-to-use platform where investors could exchange dollars or euros for digital coins like Bitcoin and Ether. Its valuation was north of $30 billion.
But over less than week in November 2022, a run on deposits exposed an $8 billion hole in FTX’s accounts. Mr. Bankman-Fried resigned, handing over power to a team of lawyers who promptly filed for bankruptcy. The next month, he was arrested at his luxury apartment in the Bahamas and charged with stealing from customers to finance billions in political contributions, charitable donations and investments in other start-ups.
The investigation moved with startling speed for such a complex case. Within months, three of Mr. Bankman-Fried’s top deputies, including a former girlfriend, pleaded guilty to fraud charges and agreed to cooperate with prosecutors. Mr. Bankman-Fried was initially granted home detention, but the judge revoked his bail in August after ruling that he had tried to intimidate witnesses, and sent him to the Brooklyn detention center.
At the trial in October, Mr. Bankman-Fried’s former colleagues testified for the prosecution, telling a jury that they had conspired with him to loot customer accounts. When he took the witness stand, Mr. Bankman-Fried seemed evasive at times, repeatedly claiming that he couldn’t remember crucial details of his FTX tenure.
“When he wasn’t outright lying, he was often evasive, hairsplitting, dodging questions,” Judge Kaplan said on Thursday. “I’ve never seen a performance quite like that.”
After he was convicted, Mr. Bankman-Fried’s lawyers and family embarked on a long-shot campaign to secure a lenient sentence and rewrite the public narrative about FTX’s failure. In a sentencing memo, Marc Mukasey, one of the defense lawyers, argued that Mr. Bankman-Fried had sometimes behaved strangely on the stand because he was autistic. He also cited the mogul’s charitable initiatives, arguing that FTX was supposed to be a force for good in the world.
But the defense’s case centered on the money that FTX users lost when the exchange went under. Mr. Mukasey claimed that customers were set to be made whole in the bankruptcy process, putting the losses caused by Mr. Bankman-Fried’s actions at “zero.”
The prosecutors rejected that argument. While FTX’s new leadership has predicted that customers will eventually get their deposits back, the money they receive will be equivalent to the dollar value of their holdings in November 2022 — and won’t account for a recent surge in the crypto markets that sent Bitcoin to its highest-ever price.
Mr. Bankman-Fried “demonstrated a brazen disrespect for the rule of law,” prosecutors wrote in a sentencing memo. “He knew what society deemed illegal and unethical, but disregarded that based on a pernicious megalomania.”
On Thursday, Judge Kaplan said of FTX’s victims: “The defendant’s assurance that they will be paid in full is misleading. It is logically flawed. It is speculative.”
Over the past several weeks, the prosecutors filed hundreds of letters from FTX customers that laid out how the financial losses had devastated their lives. One customer said the collapse led to “suicidal thoughts.”
“Sam Bankman-Fried has to think for the rest of his life of the multitude of lives he destroyed with his selfishness and superficiality,” the customer wrote. “I really hope that justice will teach him the difference between life and video games.”
Another FTX user, Sunil Kavuri, who lost $2 million when the company collapsed, testified at the hearing that the implosion had wiped out money he planned to spend on a house and his children’s eduction.
“I’ve lived the FTX nightmare for almost two years,” he said.
When Mr. Bankman-Fried spoke, he offered a sometimes-rambling assortment of thoughts, apologizing for his mistakes while insisting that FTX had enough assets to make customers whole.
“I made a series of bad decisions,” he said, his leg shaking. “They weren’t selfish decisions. They weren’t selfless decisions. They were bad decisions.”
Mr. Bankman-Fried has vowed to appeal his conviction, hiring a lawyer from the law firm Shapiro Arato Bach to oversee that effort. But in his remarks, he appeared to accept that he would be in prison for some time.
“At the end of the day, my useful life is probably over now,” he said.
Matthew Goldstein contributed reporting.
