By Eric Vandenbroeck and co-workers

The Bankman-Fried Case

Back in early November 2022, a reader sent us a copy of Tracers in the Dark a subject we had already been twice alerted about hence in October 2022 when we started with an initial rough draft foreshadowing the current situation soon to be published here followed by two more articles here and here. 

On 13 April 2022, Virgil Griffith, a US researcher for now infamous Ethereum Foundation, was sentenced to more than five years in prison for conspiring to help North Korea evade US sanctions using cryptocurrency. The sentence was the minimum amount of prison time sought by prosecutors. The 39-year-old thus is now facing a maximum sentence of 20 years in prison and a $1m fine.

Today Bankman-Fried’s 25-year sentence is about half of the 40 to 50 years prosecutors had sought. Judge Kaplan said he weighed several 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 that 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 could 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.

Some former FTX customers expressed anger and disappointment on Thursday after Sam Bankman-Fried, the crypto exchange's former billionaire boss, was sentenced to 25 years in prison for stealing $8 billion from customers.

"25 years is a joke," a member of an FTX creditors group with the username Bruno Dixon wrote on the messaging app Telegram minutes after the sentence was handed down by a New York judge.

Another member of the same Telegram group, going by Steven, said the sentence was "laughable for such a serious crime."

More than an estimated 1 million customers face potential losses as a result of FTX's sudden November 2022 collapse. Victims say they are still owed more than $19 billion based on current crypto prices.

A New York jury last year found Bankman-Fried guilty of stealing from unsuspecting customers to prop up his hedge fund Alameda Research, buy luxury properties, and fund political donations.

Manhattan judge ripped Sam Bankman-Fried as a remorseless scammer obsessed with political power as he sentenced the dethroned crypto king to 25 years in prison Thursday — five months after he was found guilty of stealing more than $8 billion from customers of his now-bankrupt cryptocurrency exchange FTX.

Judge Lewis Kaplan said the 32-year-old former billionaire owner of the popular FTX trading platform “presented himself as the good guy” in favor of “appropriate regulation of the crypto industry” — but that his friendly persona was just an “act.”

Sam Bankman-Fried’s parents ‘heartbroken’ for ’empathetic’ son.

Elsewhere, several prominent voices in the crypto community took issue with Sam Bankman Fried's 25-year sentence, given Ross Ulbricht was sentenced to life in prison in 2015.

Ulbricht created Silk Road — a website that lets users anonymously buy and sell anything, including drugs and hacking tutorials. Transactions on the site took place using Bitcoin, making it much harder to trace.

Bitcoin Magazine, a crypto publication with more than 3 million followers, posted on X shortly after SBF was sentenced on Thursday.

 

 

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