Bankman-Fried sentenced to 25 years in FTX fraud

Update:

• A federal judge in New York sentenced FTX founder Samuel Bankman-Fried to 25 years in prison and ordered him to pay $11 billion, Wired reports.
• U.S. District Judge Lewis A. Kaplan says the 32-year-old “made a very bad bet about the likelihood of getting caught,” according to Law360.com.
• Bankman-Fried spoke for 20 minutes during the hearing, saying he made a series of bad decisions but not that he intentionally committed crimes.
• “The judgment has to adequately reflect the seriousness of the crime,” Wired reports Kaplan said. “This was a very serious crime.”

Bankman-Fried FTX trial overview: 

• Who: Former FTX CTO Zixiao “Gary” Wang testified Sam Bankman-Fried lied to investors about the FTX trading account of his Alameda Research hedge fund. 
• Why: Wang said Bankman-Fried directed coders to create a loophole that would later allow the FTX trading account to withdraw $8 billion in customer funds on the same day he tweeted the account was “just like everyone else’s.” 
• Where: The criminal case against Bankman-Fried is being held in New York federal court. 

(Oct. 11, 2023)

Sam Bankman-Fried, jailed FTX founder and CEO, tweeted a lie about the FTX trading account of his Alameda Research hedge fund the same day he directed coders to create a loophole that would later allow it to defraud FTX investors, a former top executive testified last week. 

Zixiao “Gary” Wang, FTX co-founder and former chief technology officer, testified Bankman-Fried tweeted the FTX trading account for Alameda Research was “just like everyone else’s” despite a loophole later allowing it to withdraw $8 billion in customer deposits, Law360 reports. 

The testimony was part of an ongoing criminal trial against Bankman-Fried, who has been jailed since August and charged with seven criminal counts of securities fraud, wire fraud and conspiracy to launder money, The Guardian reports. 

Wang’s testimony, meanwhile, concluded the first week of the criminal trial, which is expected to last for at least one month, Law360 reports. 

FTX co-founder accuses Bankman-Fried of intentionally lying to investors

Wang, who pleaded guilty to his own charges and is cooperating with prosecutors, testified Bankman-Fried directed him to create a special command during the early days of FTX that would prevent Alameda’s account from ever being liquidated, Law360 reports. 

The alleged request went against standard policy for the cryptocurrency exchange, according to Wang, who testified customers accounts would automatically be liquidated if an investor tried to withdraw beyond its available balance. 

According to Law360, Wang testified he implemented the feature on July 31, 2019, the same day Bankman-Fried allegedly tweeted Alameda’s account was a liquidator provider for FTX but otherwise “just like everyone else’s.” 

Prosecutors argued Bankman-Fried intentionally lied to investors, while his defense has maintained he always acted in good faith, Law360 reports. 

Bankman-Fried has also been accused of using misappropriated money to fund more than $100 million in political donations made prior to the 2022 election. 

Did you ever invest with the now-defunct FTX cryptocurrency exchange? Let us know in the comments. 

The Bankman-Fried FTX case is U.S. v. Bankman-Fried, Case No. 1:22-cr-00673, in the U.S. District Court for the Southern District of New York.

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