Sam Bankman-Fried faces 40-50 year in prison, $11 billion fine

U.S. prosecutors have recommended a severe 40-50 year prison sentence for Sam Bankman-Fried, the founder and former CEO of FTX, following his conviction on fraud and conspiracy charges linked to the collapse of the once-major crypto exchange.

According to the Department of Justice’s Southern District of New York office, Bankman-Fried engaged in deceitful practices such as lying to investors, sharing fake documents, and illegally funneling millions of dollars into the political system. Prosecutors argue that a substantial sentence is necessary to reflect the gravity of the harm caused to thousands of victims, deter future financial misconduct, and prevent Bankman-Fried from committing fraud again.

The requested penalty also includes a forfeiture exceeding $11 billion, with prosecutors deeming it a conservative sum considering the scale of the fraud. Efforts to recover funds have targeted Bankman-Fried’s political contributions, labeled as “the largest-ever campaign finance offense,” with over $3 million already returned by candidates.

The memo cites comparisons to other high-profile financial criminals, notably Bernie Madoff, who received a 150-year sentence for his $13 billion Ponzi scheme. It details the sources of the proposed forfeiture, including seized bank deposits, funds from Binance accounts, Binance.US accounts, and proceeds from the sale of Robinhood shares.

Prosecutors highlight evidence from Bankman-Fried’s trial, including testimony from former associates alleging bribery of foreign officials and questionable financial transactions. Bankman-Fried was convicted on seven counts of fraud and conspiracy in November, with sentencing scheduled for March 28.

Bankman-Fried’s defense team proposed a 6-year sentence in a previous memo, a suggestion dismissed by prosecutors as “woefully inadequate” given the severity of the crimes.

Federal prosecutor accused SBF of running a multiyear scheme that defrauded customers and lenders on the financial condition of FTX and Alameda from 2019 through November 2022. He also violated federal campaign finance laws and misled the Federal Election Commission by funneling $70 million in illegal contributions to political candidates.

Bankman-Fried is also accused of misappropriating $8 billion worth of customer assets to buy extravagant real estate and vanity projects in the Bahamas, trade cryptocurrencies, invest in other companies and make tens of millions of dollars in political donations.

Prosecutors have called his actions “a fraud of epic proportions” and one of the largest and most “brazen” frauds in recent memory.

Bankman-Fried was extradited from the Bahamas, where he lived and where his firms were based, to the United States on December 21. On the next day he appeared in court and was granted bail on a $250 million recognizance bond, secured by his family home in California.

Two of Bankman-Fried’s closest allies, Alameda CEO Caroline Ellison, and FTX co-founder Gary Wang, have pleaded guilty to criminal charges. The agreements indicate that Ellison, 28, and Wang, 29, have agreed to cooperate fully with the government after being slapped with civil and criminal charges alleging fraud and conspiracy.