A federal judge sentenced Sam Bankman-Fried to 25 years in prison on Thursday. The already jailed founder of FTX just turned 32; if he serves 85 percent of his sentence, he’ll be free after 21 years, when he’s 53. Bankman-Fried is preparing to appeal his conviction last fall on seven fraud, conspiracy, and money laundering charges, but most everyone agrees that this effort is a long shot. His sentencing ends his time in the spotlight as America’s newsiest financial crook. (At least among convicted ones.)
Before imposing the sentence, Judge Lewis Kaplan dismissed the most potent arguments by Bankman-Fried’s defense team and made clear his anger at Bankman-Fried’s behavior leading up to and during his trial. Bankman-Fried’s lawyer spoke, and then Bankman-Fried did, too, focusing largely on the harm he’d caused to FTX’s employees who had staked their careers on him. He awkwardly alluded to an argument he has made since FTX collapsed, that customers could’ve gotten their money back if he’d been given more time to fix the situation instead of ceding control to a bankruptcy team. Prosecutors argued he still hadn’t accepted responsibility, and it looked like he hadn’t. Kaplan noted Bankman-Fried’s lack of remorse and habit of lies and evasions at his trial. Then the judge sent him away. It’s a stiff sentence, though Bankman-Fried may have thought it would be even longer given what the judge said about him before handing it down.
Bankman-Fried’s sentencing presented an odd situation. Ordinarily, an influential component of federal sentencing is a presentence report from the probation officers, who submit a recommendation to the judge alongside the requests of prosecutors and the defense. The presentence report for Bankman-Fried called for 100 years out of a maximum 110, a term his lawyers called “barbaric” and that even the prosecutors for the Southern District of New York found too aggressive. Bankman-Fried’s team asked the judge to sentence him to six and a half years or less. Prosecutors countered at between 40 and 50 years.
There was another plausible reason for lowering the sentence, though: A recent rebound in crypto prices and the head-down work of FTX’s bankruptcy staff have seemed poised—though not certain—to recover all of the money that FTX’s customers lost when Bankman-Fried’s fraudulent management of their assets brought the exchange down. Bankman-Fried’s lawyers seized on that. But it didn’t work, both because Kaplan found Bankman-Fried’s team’s arguments unpersuasive and because he found Bankman-Fried himself to be such a problematic defendant that a grand show of leniency was out of the question.
It’s not that Bankman-Fried didn’t have some case for it. As his lawyers argued, he was a first-time offender, and one player on a whole team of admitted felons. Plus, the most sympathetic group of his victims, FTX’s depositors, may still get back much or all of what they lost as a result of his crimes—though according to federal sentencing guidelines, that recovery isn’t supposed to matter. Bankman-Fried is clearly a weird, weird dude whose lovable qualities are an acquired taste. His lawyers and allies repeatedly hammered that point before the sentencing in letters and memos to Judge Kaplan, who had broad leeway in the case.
Martin Auerbach, a former SDNY prosecutor who has practiced in Kaplan’s courtroom and now does white-collar defense work for the firm Withers, said that appealing to those qualities was the defense’s best argument. “I think what they correctly perceive is that the judge’s impression of their client is far from feasible” for Bankman-Fried to get a lighter sentence, he told me before the sentencing. Bankman-Fried’s lawyers literally kicked off their sentencing memo with an attributed Abraham Lincoln quote: “I don’t like that man. I must get to know him better.” Auerbach thought it was the strongest part of the brief. Before Kaplan ruled, Bankman-Fried’s top lawyer called him “a beautiful puzzle.”
The aim was to portray Bankman-Fried as an oddball who wasn’t out to hurt people (his lawyer even noted his veganism, stretching to make that case) and just ended up making mistakes. There was a difference between Bankman-Fried and, for example, Bernie Madoff. In a Ponzi scheme, investors are guaranteed to lose their money. In Bankman-Fried’s fraudulent ploy to speculate at his hedge fund with FTX customers’ money, the goal was that he would not lose their money and could return it to them on demand. Didn’t work! But that was the idea. “Madoff was a vicious, selfish sociopath who conducted a fraud in which the outcome of people losing money was virtually inevitable,” Auerbach told me. “What Sam Bankman-Fried did was take people’s money and secretly make bad bets.”
The seeds were there—not to make the case that Bankman-Fried was innocent or a victim of circumstance, but that he was the type of thieving fraud worthy of some extra consideration. That Bankman-Fried is still staring down a quarter century behind bars is a testament to everything else about his case: the extraordinary scale of the fraud, what it did to victims, and how lousy a defendant he was.
Bankman-Fried hired a fresh team of lawyers for the sentencing, and they did their best to make reasonable-ish points in his favor. But all of them had holes, and some were gaping. Even the point that FTX depositors were on the verge of getting their money back had major shortcomings. The government first noted that exchange customers weren’t the only victims, that investors and lenders had lost billions, too. They argued that other crooks (including Madoff) have had their damage lessened by bankruptcy trustees who work feverishly to recover funds, and that Bankman-Fried did not deserve credit for their work.
Most importantly, the prosecutors pointed out the opportunity cost of FTX melting down when it did. On Nov. 1, 2022, almost immediately before FTX’s public troubles began, Bitcoin traded at just over $20,000. It now trades at over $70,000. FTX depositors may get back the value of their deposits from the time of the bankruptcy, but there’s no indication they’ll get what they missed out on by not having access to their money during a booming market in both crypto and equities over the past 17 months. The government pressed this point in its own filings and via victim impact statements. One FTX customer who said the situation had “shattered my sense of financial security and stability” was particularly incensed about the idea that they might somehow be made whole if they got back the 2022 value of their crypto. “The stolen property, now worth much more, should rightfully be returned in its current value to truly make the victims whole,” the customer urged.
Kaplan agreed with the prosecutors and the victims. He rejected wholesale the Bankman-Fried team’s argument about loss, noting that it wasn’t limited to customers, and that “a fortuitous run-up in the value of some cryptocurrencies bears no relation to the gravity of the crimes that were committed.” (There was no broadcast from the courtroom throughout this proceeding, but Inner City Press shared his remarks.)
The whole argument about calculating loss might have been window dressing. The most obvious problem Bankman-Fried faced throughout his trial was the mountain of evidence and cooperative testimony against him. But next most obvious was his obnoxious behavior as a defendant, which prosecutors made sure to remind the judge of as they urged the stiffer sentence. (Not that Kaplan needed a reminder.) Kaplan sent Bankman-Fried to jail before the trial, revoking his bail, because Bankman-Fried had tampered with witnesses, prosecutors argued, and violated an agreement not to use a VPN. And indeed, Kaplan found that Bankman-Fried had attempted to tamper with witnesses.
There is no positive way for a person to go about being convicted of seven felonies. Yet once the trial began, Bankman-Fried did not score style points. He was often evasive. He struggled to counter a cohesive narrative from his co-conspirators that he was a puppetmaster, not a fool. And given his convictions and his testimony on the stand, it logically followed that he had lied in his testimony. Rachel Maimin, a former SDNY prosecutor, told me all of that behavior would fit into a “mosaic” that informed his sentence. When Kaplan explained himself from the bench on Monday, he confirmed that he found Bankman-Fried had perjured himself on the stand three different times. Where this all was heading was predictable from the second Bankman-Fried started foolishly talking to the press late in 2022, and it only got more predictable as prosecutors tore him up with his own words during cross-examination. Moments before issuing the sentence, Kaplan brought up a November 2022 press interview with Bankman-Fried as evidence of Bankman-Fried being two-faced.
Prosecutors rolled out even more evidence before sentencing that made Bankman-Fried look like more of a calculated villain than an in-over-his-head kid. They shared brainstorming docs from Bankman-Fried’s Google Drive, where he plotted different public-relations strategies to buttress his image and find other parties he could blame for FTX’s meltdown. “Go on Tucker Carlsen, come out as a republican,” was one idea he jotted down. “Come out as extremely pro crypto, pro freedom,” was another. Other ideas included blaming FTX’s lawyers and bankruptcy team and “leaning into” certain narratives. Every conceivable thing that Bankman-Fried could’ve done to make himself a less appealing recipient of leniency in sentencing, he did. He flaunted pretrial rules, lied on the stand, and committed his most cynical self-preservation tactics not just to paper but to a searchable Google account.
Short of typing out an email with the subject line “I do not give a shit about my victims and hope they’re all poor now,” he could not have given better ammunition to people who wanted to see him in prison for a long time. What choice did the judge have? Kaplan “probably has a negative view of the way this young man didn’t learn certain basic life lessons that allowed him to do what he did,” Auerbach said. “And that it is now incumbent on the judge to teach him those life lessons.”
