Updated Mar 28, 2024 - Business

FTX founder Sam Bankman-Fried sentenced to 25 years in prison

Photo illustration of Sam Bankman Fried with gavels.

Photo Illustration: Shoshana Gordon/Axios. Photo: Angus Mordant/Bloomberg via Getty Images

A federal judge slapped Sam Bankman-Fried with a 25-year sentence on Thursday for his role in bankrupting cryptocurrency platform FTX and defrauding its customers, completing his downfall from quirky billionaire philanthropist to felon.

Why it matters: Judge Lewis Kaplan chose a much harsher sentence for the disgraced crypto mogul than the defense's request of five to seven years.

  • In pre-sentencing comments, Kaplan ripped the disgraced entrepreneur for his "apparent lack of any remorse."
  • During sentencing, Kaplan referred to conversations Bankman-Fried had with ex-Alameda Research CEO Caroline Ellison, who also dated SBF on and off.
  • “He knew it was wrong, he knew it was criminal, he regrets he made a very bad bet about the likelihood of getting caught," Kaplan said.
  • The judge also roundly rejected the defense's claim that there was ultimately no loss to customers.

The big picture: Generally known as SBF, the disgraced mogul was found guilty in November on all seven charges that prosecutors brought against him, including fraud and conspiracy to commit money laundering.

  • FTX's bankruptcy is seen as the climax of the crypto crash that began as the price for bitcoin crested in November 2021. The rout deepened as the terra stablecoin blew up, which exposed the house of cards that Three Arrows Capital had become.
  • More than $2 trillion in global wealth was wiped out in that collapse.

Details: The defense has argued that SBF should be granted leniency because customers will be paid back the dollar value of their holdings at the time the company declared bankruptcy.

Flashback: On Oct. 11, the court ruled that the defense could not bring up the Anthropic investment in court because the fact that customers were getting repaid was not relevant.

  • "This is like saying that if I break into the Federal Reserve Bank, make off with a million bucks, spend it all on Powerball tickets and happen to win, it was OK," Judge Kaplan said as he made his ruling.
  • "The crime is the misappropriation. That's it. It's finished. The minute the misappropriation happens, whether it's used wisely, foolishly or whatever."

Zoom out: Much has been made of Bankman-Fried's unique motivations as a businessperson. He presented himself as an effective altruist — someone who believed in donating lots of money to philanthropies that had strong evidence for their effectiveness.

  • More specifically, he was a consequentialist. That is, he believed what made an action good or bad was the outcome of the action.
  • This is opposed to a deontologist, who believes that choices are inherently good or bad.

SBF believed he could play with other people's money, make lots more, pay them all back, and do all sorts of good — such as preventing the next pandemic.

  • That didn't happen, though. Instead, the company got out over its skis, stopped processing customer withdrawals, declared bankruptcy, fired hundreds of employees, and gave thousands of users two very stressful years (and counting) watching the courts to see if they would get their money back.

The bottom line: Bankman-Fried and his family now know the full extent of the consequences of his miscalculation.

Go deeper: FTX timeline: Behind crypto mogul SBF's meteoric rise and fall

Editor's note: This story is breaking and will be updated.

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