Sam Bankman-fried FTX scandal: On March 28, a judge sentenced Sam Bankman-Fried to 25 years in jail. This was for stealing $8 billion from users of the now-bankrupt FTX cryptocurrency exchange he established. This marked the final stage in the erstwhile billionaire wunderkind’s stunning downfall.
What the Judge said on Sam Bankman-fried FTX scandal?
US District Judge Lewis Kaplan punished in Manhattan court session, dismissing Bankman-Fried’s argument that FTX customers did not lose money. He further accused him of lying throughout his trial evidence. On November 2, a jury found Bankman-Fried, 32, guilty of seven fraud and conspiracy offences arising from FTX’s 2022 collapse, which prosecutors described as one of the largest financial frauds in US history.
“He knew it was wrong,” Mr. Kaplan remarked of Bankman-Fried before imposing the penalty. “He understood it was a crime and now regrets making a very terrible gamble on the likelihood of being caught. But he’s not going to admit anything, which is his right.”
Bankman-Fried stood with his hands clasped in front of him while Mr. Kaplan read the sentence.
During his 20-minute speech to the judge, Bankman-Fried, dressed in a beige short-sleeve jail t-shirt, recognized that FTX customers were hurt and apologized to his former FTX colleagues.
The sentence marked the culmination of Bankman-Fried’s plunge from an ultra-wealthy entrepreneur and major political donor to the biggest trophy to date in a crackdown by US authorities on malfeasance in cryptocurrency markets. Bankman-Fried has vowed to appeal his conviction and sentence.
Mr. 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 judge also stated that Bankman-Fried lied during his trial testimony when he claimed he was unaware that his hedge fund had spent customer deposits obtained from FTX.
Prosecutor Demand & the final Judgement
Federal prosecutors demanded a prison term of 40 to 50 years. Bankman-Fried’s defence attorney, Marc Mukasey, had contended that a sentence of less than 5-1/4 years would be reasonable.
Bankman-Fried told the judge, “Customers have been suffering…” I had no intention of minimizing that. I also believe that something was lacking from what I said during this process, and I apologize for that.
Bankman-Fried informed the judge that his FTX colleagues put a lot of effort into it, and he threw it all away. “It haunts me every day.”
Three of his former close associates appeared as prosecution witnesses at trial, claiming that he directed them to utilize FTX customer funds to cover losses at Alameda Research.
Bankman-Fried admitted in his defence that he made mistakes, such as failing to develop a risk management team, but denied intending to trick anyone or steal consumers’ money.
Members of the US Marshals Service escorted him into the courthouse for the hearing. His parents, Stanford University law professors Joseph Bankman and Barbara Fried, attended.
How did the scandal begin?
Bankman-Fried, a Massachusetts Institute of Technology graduate, drove the rise in the value of Bitcoin and other digital currencies to a net worth of $26 billion, according to Forbes magazine, before turning 30.
Bankman-Fried was noted for his unruly curly hair and dedication to the effective altruism movement. The movement that promoted gifted young people to concentrate on earning money and donating it to beneficial causes. He was also a major contributor to Democratic politicians and political causes ahead of the 2022 US midterm elections.
Prosecutors, however, claim that he misappropriated client funds for years while projecting a respectable image.
In messages to Kaplan, a number of FTX clients have expressed their displeasure. This was for being paid on the basis of their cryptocurrency’s worth during FTX’s bankruptcy. The paid was opposed to the higher prices at which those assets are currently trading.
Since August 2023, Bankman-Fried has been held at the Metropolitan Detention Center in Brooklyn. Kaplan withheld his bail after discovering that Bankman-Fried had probably tampered with witnesses at least twice.
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