Sam Bankman-Fried sentenced to 25 years in federal prison

New York
CNN
—

Sam Bankman-Fried was sentenced to 25 years in federal prison for defrauding customers and investors in his failed cryptocurrency exchange FTX, a Manhattan court ruled Thursday.

Before handing down the sentence, Judge Lewis Kaplan said there was “a risk that this person might do something very bad in the future, and it’s not an insignificant risk”.

Kaplan agreed with prosecutors that Bankman-Fried’s “want to become a very politically influential figure in this country” fueled his financial crimes.

Bankman-Fried’s 25-year sentence was about half of what prosecutors had sought, but he was still on the high end of what is known as a high-profile white-collar fraud case. Ahead of him was Bernard Madoff, who was sentenced to 150 years in prison for leading a $20 billion Ponzi scheme. He died after serving about 12 years in prison. Theranos founder and CEO Elizabeth Holmes was sentenced to just over 11 years in prison after being convicted on four counts of defrauding investors while running her failed blood-testing startup Theranos.

Parole is not allowed in the federal case, but Bankman-Fried could still shave years off his sentence.

“Had SBF been able to receive all available prison credits, his sentence could have been reduced to 12.5 years,” former federal prosecutor Mitchell Epner told CNN.

Federal prisoners can typically receive up to 54 days of time credit per year for good behavior, which can result in a time reduction of about 15 percent. However, since 2018, non-violent federal prisoners have had their sentences reduced by up to 50% under prison reform legislation known as the First Step Act.

Epner said the First Step Act was promoted as a civil rights measure aimed at helping minority offenders who committed non-violent drug crimes.

“This has proven to be a huge boon to white-collar criminal defendants, who already receive significantly lower sentences than drug dealers,” Epner added.

There is also a provision that allows courts to reduce sentences for special and compelling reasons, often medical reasons, said Jordan Estes, a former federal prosecutor now a partner at the law firm Kramer Levine.

“Since the beginning of the pandemic, courts have been more willing to release early under this provision if a defendant has served the majority of their sentence,” Estes said.

In addition to prison terms, Kaplan also ordered the forfeiture of $11.02 billion.

The forfeiture will be paid out over time, and Bankman-Fried may be required to pay out all of his available assets, plus a nominal monthly payment.

“This forfeiture will stay with him for the rest of his life,” Epner said. “When he gets out of prison, most of the money he makes will be spent.”

However, he said he would not pay compensation because it was “unrealistic” due to the large number of victims in this case.

Judge Lewis Kaplan said he will recommend that the Bureau of Prisons place Bankman-Fried in a medium-security facility or any lower-security facility the bureau deems appropriate. He also noted that the location should be as close to the San Francisco area as possible so that Bankman-Fried’s family could visit him.

“We are heartbroken and will continue to fight for our son,” Bankman-Fried’s parents, Joe Bankman and Barbara Fried, said in a statement after leaving the Manhattan courtroom Thursday.

Bankman-Fried’s lawyers said they would continue to appeal his conviction.

Correction: A previous version of this story misstated the forfeiture amount. to US$11.02 billion.