Disgraced Crypto Trading King Sam Bankman-Fried Is Sentenced To 25 Years In Prison For FTX Fraud

Last Thursday, FTX founder Sam Bankman-Fried was sentenced to 25 years in prison by Judge Lewis A. Kaplan. Prosecutors had sought a 40- to 50-year sentence for the disgraced crypto king. Judge Kaplan said Bankman-Fried had shown no remorse. Bankman-Fried’s defense team will appeal the conviction and sentencing…

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e knew it was wrong,” Kaplan said of Bankman-Fried before handing down the sentence. “He knew it was criminal. He regrets that he made a very bad bet about the likelihood of getting caught. But he is not going to admit a thing, as is his right.”

In the courtroom, Bankman-Fried appeared to have had a haircut and was dressed in a gray suit. He also was a slimmer version of himself compared to his tenure at the helm of FTX. 

After deliberating for just a few hours, jurors concluded he knowingly defrauded investors. 

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Ellison, the former CEO of FTX sister company Alameda, was once the girlfriend of Bankman-Fried and later was one of his roommates in the $300 million Bahamas property. She was considered the prosecution’s star witness, testifying that Bankman-Fried instructed her to commit fraud, which she did. She received a plea deal in exchange for her testimony.  Ellison is a graduate of Stanford University and both her parents are educators at MIT. 

Alameda was a major trader in the cryptocurrency space and traded frequently on FTX’s platform, she detailed. Though Bankman-Fried was the founder and majority owner of Alameda, he eventually ceded control of its operations and focused primarily on his role as the chief executive of FTX. At its peak, FTX amassed a valuation of roughly $32 billion and was the world’s third-largest cryptocurrency exchange by volume. In October 2021, Ellison was named co-CEO of Alameda with Sam Trabucco. 

The duo are law professors at Stanford University. In September, FTX sued the duo alleging they, in advisory roles at the exchange, “fraudulently transferred and misappropriated” millions of dollars. 

Former colleagues of Sam Bankman-Fried and FTX employees Gary Wang and Nishad Singh also provided incriminating testimony against him. 

Adam Yedidia, the former FTX coder and college roommate of Bankman-Fried, testified how customers deposited money into FTX, but it was actually an Alameda bank account. The funds would turn up in the customer’s FTX account on its website. However, roughly $8 billion stayed with Alameda, never making its way to FTX despite the balances indicating it had. 

His parents, Joseph Bankman and Barbara Fried, were present in the courtroom. Bankman-Fried’s parents, Barbara Fried and Joseph Bankman, reacted emotionally following the verdict, with courtroom sketch showing their hands over their faces. 

Some of the funds were directed to a political action committee that supported Democrat Party causes. Additionally, the parents received a deed to a Bahamas property.

Kaplan said he had found that FTX customers lost $8 billion, FTX’s equity investors lost $1.7 billion, and lenders to the Alameda Research hedge fund Bankman-Fried founded lost $1.3 billion.

“The defendant’s assertion that FTX customers and creditors will be paid in full is misleading, it is logically flawed, it is speculative,” Kaplan said. “A thief who takes his loot to Las Vegas and successfully bets the stolen money is not entitled to a discount on the sentence by using his Las Vegas winnings to pay back what he stole.”

Bankman-Fried, 32, was found guilty in November on two counts of wire fraud and five counts of conspiracy following the collapse of his crypto empire FTX in November 2022, which has been compared to Enron. The exchange had merged assets with sister hedge fund Alameda Research amid cash problems, leading waves of customers to withdraw funds. Bankman-Fried was indicted the next month.

Referring to his FTX colleagues, Bankman-Fried told the judge on Thursday, “They put a lot of themselves into it and I threw that all away. It haunts me every day.”

By comparison, disgraced Theranos founder Elizabeth Holmes is serving an 11-year sentence, but faced as much as 80 years in prison. Bernie Madoff was sentenced to 150 years and died in prison.

Bankman-Fried, who capitalized on a rise in bitcoin and at one point accumulated an estimated $26 billion fortune, is also expected to be ordered to pay restitution.

Bitcoin, which accounted for much of Bankman-Fried’s net worth, fell as low as $15,000 and has since rebounded to the $70,000-plus level, following the approval of a bitcoin ETF by the Securities and Exchange Commission earlier this year. It’s unclear how the rebound in crypto, if at all, will play out in providing restitution to his victims.

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