Why Sam Bankman-Fried Received a 25-Year Prison Sentence

Sam Bankman-Fried, the former billionaire who was found guilty of defrauding customers and investors of his cryptocurrency exchange FTX, was sentenced to 25 years in prison on Thursday by a federal judge, who ruled that Bankman-Fried committed perjury and attempted witness tampering. The sentencing closes the door on an astonishing rise-and-fall saga in which Bankman-Fried, 32, was lauded as one of the world’s most successful entrepreneurs before losing more than $8 billion worth of FTX customer deposits.

Bankman-Fried’s sentence is less what federal prosecutors had hoped for: they recommended that he should receive 40-50 years due to the “extraordinary dimensions of his crimes” and the risk that he might carry out a future fraudulent scheme. Bankman-Fried and his lawyers conversely argued that he should receive five to seven years.

In comparison, Bernie Madoff received a 150-year sentence; Enron CEO Jeff Skilling received a 24-year sentence; and Theranos founder Elizabeth Holmes received 11 years.

On Thursday, Judge Lewis Kaplan used strong language to criticize Bankman-Fried and justify his sentence. He said that Bankman-Fried perjured himself three times while under oath, including falsely testifying that he had no knowledge that his trading firm Alameda had spent FTX customer funds until the fall of 2022. He said that Bankman-Fried displayed “exceptional flexibility with the truth” and an “apparent lack of any real remorse”—and that Kaplan had never seen as "evasive" a "performance" as Bankman-Fried's in his almost 30 years as a judge. Kaplan also ordered Bankman-Fried to forfeit $11.2 billion in assets.

Tim Howard, a former federal prosecutor with the U.S. Attorney for the Southern District of New York and now a partner at the law firm Freshfields, says that 25 years is “an incredibly serious sentence for a first-time white-collar defendant.”

“It sends a serious message to those in the crypto industry that you can't lie to get people's money,” he says.

Bankman-Fried apologized for his actions on the stand. "I failed everyone I care about," he said. "I made a series of bad decisions." He maintained, however, that he could have paid back customers if he had been allowed to keep control of his company.

FTX's Collapse

Bankman-Fried’s sentencing comes four months after a highly publicized trial in which he took the stand to claim that FTX’s collapse was the result of mistakes and not ill intent. Ultimately he was found guilty on all seven of the criminal counts he was charged with by the Department of Justice; the jury took less than five hours to come to their decision.  

Bankman-Fried, who often goes by the nickname SBF, founded the crypto exchange FTX in 2019. It allowed its customers to purchase bitcoin, ether and other cryptocurrencies with cash, as well as to make all sorts of high-risk bets on the direction of cryptocurrency prices. Thanks to an aggressive marketing campaign that included a Super Bowl commercial with Larry David and endorsement deals with Tom Brady and Stephen Curry, FTX became one of the most-used crypto exchanges in the world. In October 2021, Bankman-Fried was anointed by Forbes as the world’s richest 29-year-old, with a net worth of $22.5 billion.

But in November 2022, rumors began to spread about FTX’s shaky financial position. When concerned customers began to pull back their money from the exchange, withdrawing at a rate of $120 million an hour, FTX was soon unable to meet the demand, and stopped processing withdrawals. Many people had tens or hundreds of thousands of dollars locked away in their accounts, unable to be retrieved. A few days later, Bankman-Fried signed away control of the company, which quickly filed for bankruptcy. 

At the trial last October, some of Bankman-Fried’s closest collaborators accused the former CEO of knowingly funneling money from FTX depositors to his trading firm, Alameda Research, over a period of several years. Documents show that Bankman-Fried then spent those funds on Bahamian real estate, startup investments and political donations. “The money belonged to customers and the customers did not give us permission to use them for other things,” FTX co-founder Gary Wang testified.

Read More: The Bombshell Evidence That Led to Sam Bankman-Fried’s Conviction

The Battle Over Sentencing

Judge Lewis Kaplan, who berated Bankman-Fried during the trial for his evasive way of answering questions, handed out the sentence on Thursday. (Kaplan also presided over the recent defamation lawsuit brought by E. Jean Carroll against Donald Trump.)

Bankman-Fried faced a maximum of 120 years prison, but many of the charges were similar in nature, and so were not considered separately in sentencing. Over the last few months, both sides submitted letters to the judge lobbying for either a shorter or longer sentence. Bankman-Fried’s mother, Barbara Fried, wrote that her son has mannerisms associated with people on the autism spectrum—and that “his inability to read or respond appropriately to many social cues…put him in extreme danger” in prison, she wrote. 

The prosecution team, in contrast, submitted documents which they argued showed evidence of Bankman-Fried’s continued scheming and lack of remorse for his actions. After FTX collapsed in November 2022, Bankman-Fried wrote documents in which he brainstormed ways to garner public support. One of his ideas was “Go on Tucker Carlsen [sic], come out as a republican”—despite the fact that he had been one of the biggest Democratic donors of the 2022 election cycle.

Bankman-Fried’s lawyers also argued that Kaplan should take FTX’s asset recovery into consideration. While FTX had debts of over $8 billion when it collapsed, much of that money and perhaps more will now be able to be returned to FTX customers, due to a surge in crypto prices and AI assets, and the recovery efforts from the bankruptcy team. Bankman-Fried invested $500 million in the AI company Anthropic, and this week, FTX struck a deal to sell two-thirds of those shares for $884 million. (Notably, a forensic account had testified during the trial that the original investment had come out of customer funds.)

Restitution can be taken into account for sentencing—and Bankman-Fried should not be punished if customers are eventually made whole, his lawyers argued. But FTX’s new CEO, John Ray, pushed back against that logic, writing that when Bankman-Fried left FTX in November 2022, the company was “neither solvent nor safe."

Kaplan, on Thursday, said that the defense's claim that customers and creditors would be paid in full was "misleading,” “logically flawed," and "speculative," and had little bearing on the original crime of misappropriating the money. “A thief who takes his loot to Las Vegas and successfully bets the stolen money is not entitled to a discount on the sentence,” Kaplan said. 

Kaplan ruled that Bankman-Fried had attempted to tamper with a potential witness when he sent a text message in January 2023 to Ryne Miller, the former general counsel at FTX, asking to "vet things with each other." He also criticized Bankman-Fried’s behavior as a witness on the stand during his trial. “When he wasn’t outright lying, he was often evasive, hairsplitting, dodging questions,” he said. 

Howard, the former prosecutor, says these sorts of behaviors were extremely costly for Bankman-Fried. “There are two things under sentencing law the judge has to consider: The seriousness of the offense, and the nature and characteristics of the defendant,” he says. “And Judge Kaplan basically said, ‘this is a deceptive, devious guy who can’t be trusted.’”

Kaplan himself said on Thursday that he decided on his sentence in part to make sure that Bankman-Fried cannot harm other people going forward. “There is a risk that this man will be in a position to do something very bad in the future,” he said. “In part, my sentence will be for the purpose of disabling him, to the extent that can appropriately be done, for a significant period of time.” 

Bankman-Fried will be almost 60 by the time his sentence is completed. In the federal system, prisoners can earn up to 54 days per year of good behavior, which amounts to about 15% of the sentence. 

At the sentencing on Thursday, Sunil Kuvari, a former FTX customer who says he lost $2.1 million on FTX and was involved in a class action lawsuit against influencers and celebrities who touted FTX, also testified against Bankman-Fried. Kuvari said that at least three people had committed suicide in the aftermath of FTX's collapse. “I lived the FTX nightmare everyday for almost two years," he said.

Meanwhile, Bankman-Fried’s co-conspirators who previously testified against him—Alameda co-CEO Caroline Ellison and FTX executives Gary Wang and Nishad Singh—are awaiting their own sentences after pleading guilty to various financial crimes and agreeing to cooperate with prosecutors. They seek sentences much lighter than Bankman-Fried’s.

Andrew R. Chow is writing a book about Bankman-Fried, Cryptomania, which will be published in August.