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FTX Founder Sam Bankman-Fried Sentenced to 25 Years in Prison

FTX Founder Sam Bankman-Fried Sentenced to 25 Years in Prison

The defense’s court filing was supplemented with letters from Bankman-Fried’s family members and various associates, testifying to his good character, remorse, and utilitarian ideals. “The public perception of Sam could not be further from the truth,” wrote Barbara Fried, his mother. “Being consigned to prison for decades will destroy Sam as surely as would hanging him, because it will take away everything in the world that gives his life meaning.”

Bankman-Fried’s counsel argued for a shorter sentence given that FTX creditors are on track to recover their money in full at the end of the bankruptcy process—although not everyone’s happy with the outdated valuation of the assets, given crypto’s recent meteoric rise in price. They also dismissed the government’s claim that Bankman-Fried would reoffend if allowed to reenter society too quickly as “conjecture on top of hypothetical on top of supposition.” Bankman-Fried deserved no more than six-and-a-half years in prison, his counsel claimed.

The judge was unsympathetic. “There is a risk this man will do something very bad in the future,” Kaplan said, homing in on Bankman-Fried’s appetite for risk. He described Bankman-Fried as a “math nerd” whose decision-making framework was guided primarily by “EV,” or expected value. “In other words, this is a man willing to flip a coin as to the chance of life’s continued existence on Earth. That’s a leitmotif of this entire case,” he said.

The problem for Bankman-Fried is that he can “never put the toothpaste back in the tube,” says Paul Tuchmann, another former US prosecutor and partner at law firm Wiggin and Dana. The fact that FTX users are set to recover money at an unspecified future date “does not nearly undo the harm they suffered” in the intervening period, he says. In one victim impact statement, an FTX customer said they had subsisted on ham, cheese, and ketchup sandwiches after the exchange’s collapse. In another, John Ray III, the restructuring professional steering FTX through bankruptcy, wrote that customers “will never be returned to the same economic position they would have been in today absent [Bankman-Fried’s] colossal fraud,” because the bankruptcy claims aren’t based on current crypto values.

The US Department of Justice made play of these issues in its own presentence filings, pressing home the gravity of Bankman-Fried’s crimes, the range and number of his victims, and the way he obstructed the investigation by allegedly giving “false testimony” on the stand.

The government also underlined the need to deter would-be crypto fraudsters, suggesting that “some individuals have operated under the misimpression that they are unregulated, not subject to criminal laws, or can avoid scrutiny or significant jail time.” Until the fall of FTX, the DOJ had secured few landmark crypto convictions, despite forming a specialist crypto-crime task force in 2021. But in sentencing Bankman-Fried, who had become an almost messianic figure in crypto, the judge could elect to “send a message” to the industry, says Tuchmann.

With sentencing complete, Bankman-Fried will be returned to the temporary holding facility in which he has been kept since his arrest, until the Federal Bureau of Prisons selects a permanent destination. The judge recommended Bankman-Fried be housed in a low-to-medium-security facility as close as possible to the San Francisco Bay Area, where his parents reside. A decision will be reached within the next few months.

In the federal system, there is no possibility of parole. The best Bankman-Fried can hope for—short of winning on appeal—is early release for good behavior.

The DOJ has frequently compared the FTX founder to Ponzi fraudster Bernie Madoff, who received a prison sentence of 150 years. But even the sentence requested by Bankman-Fried’s counsel feels long, says Naftalis, given the differences between the two cases. “This isn’t Madoff,” he says. “SBF was on top of crypto, but crypto is not Wall Street. Let’s remember that.”

In whatever facility, Bankman-Fried’s incarceration will be far from comfortable. “Just think about it,” says Naftalis. “A day in jail is a long time.”

This is a developing story. Please check back for updates.

Live Updates: FTX Founder Sam Bankman-Fried Found Guilty of Fraud

Live Updates: FTX Founder Sam Bankman-Fried Found Guilty of Fraud

The prosecution presented its closing arguments today as Sam Bankman-Fried drew closer to finding out whether the jury believes he carried out the seven charges alleged by the government. They include securities fraud, wire fraud, and conspiracy to launder money.

Assistant US attorney Nicolas Roos started by describing the desperation of people trying and failing to withdraw their nest eggs from the FTX exchange in November 2022 as word of the company’s troubles spread. “Who was responsible? This man, Samuel Bankman-Fried,” Roos said. “He spent his customers’ money, and he lied to them about it.” Roos described Bankman-Fried’s projects as “a pyramid of deceit.”

The trial has at times delved into the arcana of cryptocurrencies, blockchains, and financial derivatives. Roos urged the jury to ignore those complexities. “This is not about complicated issues of cryptocurrency,” he said. “It’s about deception, it’s about lies, it’s about stealing, it’s about greed.”

He went on to argue that the testimony of Bankman-Fried’s former friends and coworkers, and documents and data from FTX, showed that he had directed the company to misuse customer funds, in full knowledge that it was wrong. Roos ended by coming back to where his closing argument started—with the alleged victims of FTX’s collapse. “Everyday people lost savings, companies went bankrupt, all because of this defendant’s fraud, because he wanted more money to do whatever he wanted with,” Roos said, asking the jury to find Bankman-Fried guilty on all counts.

SBF’s Magic Hair and Other Big Moments From the FTX Trial

SBF’s Magic Hair and Other Big Moments From the FTX Trial

During cross-examination, defense attorney Mark Cohen continually tried to stress that Alameda’s total net value assets were the same across the alternatives, and Ellison kept responding that, yes, but the balance sheets were still misleading.

Things Sam Is Freaking Out About

According to Ellison’s “things Sam is freaking out about” document, Bankman-Fried was stressed about “getting regulators to crack down on Binance,” bad PR, raising money from Saudi Crown Prince Mohammed bin Salman, and possibly buying Snapchat.

In time, the bad PR (and worse than bad PR) came true, SBF didn’t raise money from Mohammed bin Salman, and he certainly didn’t buy Snapchat, but regulators have cracked down on Binance.

SBF’s Magic Hair and Loose Morals

Bankman-Fried got a haircut for the trial, which is somewhat ironic given that he allegedly saw it, Samson-like, as the source of his powers.

Ellison claimed that he said his mop of hair helped him get higher bonuses at trading firm Jane Street and was important for his image. Her testimony revealed the extent of Bankman-Fried’s obsession with his persona. For example, he and Ellison drove luxury cars in the Bahamas until he allegedly decreed that it was better for their image to drive a Toyota Corolla and Honda Civic, respectively. He courted the media as well, both by being easy to reach and by investing in media organizations such as Semafor and TheBlock, Ellison said.

In the media, Bankman-Fried tried to cultivate an aura of being obsessed with morals, specifically with the effective altruism movement, which focuses on evidence-based ways to improve the world. His more extreme moral beliefs, however, might not have passed muster if reported publicly.

According to Ellison, Bankman-Fried said that he was a utilitarian—and though some utilitarians still tried to live by rules like “Don’t lie” and “Don’t steal,” SBF didn’t agree with that. What mattered, and what he cared about most, she claimed he said, was maximizing the good.

He thought he had a 5 percent chance of becoming president, Ellison claimed, and would be willing to flip a coin if tails meant the world would be destroyed but heads meant it would be twice as good.

Old Friends Take the Stand

Two longtime friends of SBF—Adam Yedidia from MIT, and Gary Wang from math camp—testified this week. Yedidia, an FTX coder, claimed that customers who wanted to deposit fiat money (such as dollars or euros, rather than cryptocurrency) on the FTX exchange actually ended up sending that money to a bank account controlled by, and used by, Alameda. Yedidia testified under an agreement that he couldn’t be prosecuted for his testimony.

Wang, who cofounded both FTX and Alameda and served as chief technology officer, has already pled guilty and flat-out began by saying that he had committed financial crimes with SBF. In particular, Wang explained that FTX executives wrote code that gave Alameda privileges such as the ability to have a negative balance on FTX and the ability to borrow a $65 billion—so, essentially unlimited—line of credit.

Random Number Generator

Hardly the most consequential revelation, but perhaps the funniest: During his testimony, Wang was shown a SBF tweet claiming that FTX had a $100 million insurance fund. This was not true, and in fact the number they displayed had little to do with the actual amount in the fund. The number they publicized was calculated by taking the daily trading volume, multiplying that by a random number around 7,500, and dividing it by 1 billion.

Sam Bankman-Fried Is a Terrible Client

Sam Bankman-Fried Is a Terrible Client

In the weeks after Sam Bankman-Fried’s FTX crypto exchange began to crumble last November, he chose to ignore the most basic piece of legal advice: Say nothing, or risk incriminating yourself. He took media interviews. He appeared on podcasts. He tweeted incessantly. He started his own Substack. He promised to testify in front of Congress, though he was arrested before he got the chance.

Starting today, Bankman-Fried will stand trial in a New York court, accused of seven separate counts of fraud against customers, investors, and lenders. FTX collapsed after users tried to withdraw their money from the exchange but were unable to because, the Department of Justice alleges, Bankman-Fried had funneled the money into a sibling business, Alameda Research, where it was spent on high-risk crypto trades, debt repayments, personal loans, luxury purchases, and other company expenses.

The trial, whose outcome will mean little for crypto businesses or the people who lost money in FTX, has already garnered plenty of public attention. The prosecution’s witnesses will include victims of the exchange’s collapse and Bankman-Fried’s one-time paramour, former Alameda CEO Caroline Ellison. It may seem intuitive that Bankman-Fried, the protagonist, should have a speaking role. But his lawyers might well advise him to plead the Fifth Amendment and decline to testify.

In his public appearances before his arrest, Bankman-Fried characterized the situation as one big mistake. There was negligence, he admits, but no criminal intent to defraud. But his attempts to explain away the allegations could create headaches for his legal team in court. As the defense, the objective is to “create an immaculate narrative,” says Jason Allegrante, chief legal officer at crypto custody firm Fireblocks, to “present the best narrative the facts will support.” But when Bankman-Fried began “defending himself in the media and court of public opinion,” he risked “introducing into the public record a lot of information and material that can be used against him.”

As the trial progresses, Bankman-Fried’s defense team will need to take those same risks into consideration in deciding who to place on the stand.

Bankman-Fried’s trial will last four to six weeks. First, the prosecution will lay out its case, calling all its witnesses—from FTX customers to investors to alleged “coconspirators.” Then the defense will choose how to respond. Under the US justice system, the prosecution must demonstrate guilt beyond a reasonable doubt. Therefore, a viable defense strategy, says Jordan Estes, partner at law firm Kramer Levin, is to “just poke holes in the government’s case” and decline to offer up any additional witnesses.

Whether Bankman-Fried takes the stand or not will only be decided, says Estes, once the strength of the prosecution’s case becomes clear. He is by no means required to testify. “It’s his decision. We’ll just have to wait and see,” she says. “If the government’s case isn’t going well—if they call witnesses that don’t appear very credible or the cross-examination goes terribly—there’s a possibility the defense will feel it doesn’t need to do anything.”

In any criminal case, the decision to put the defendant on the stand is a “high-stakes moment,” says Allegrante. Doing so exposes them to questioning by the prosecution that they would otherwise avoid, but also to the way specific jurors might interpret their testimony. It introduces additional variables to an environment the defense hopes to carefully control.

I Looked Into Sam Altman’s Orb and All I Got Was This Lousy Crypto

I Looked Into Sam Altman’s Orb and All I Got Was This Lousy Crypto

“We don’t take ID or anything. So long as you look over 18, we scan your iris,” said Ana Howard, the contractor hired to lead onboarding in London. But everyone that registers is “one hundred percent informed and knows what they’re signing up for,” she added.

Everyone who got scanned got a free T-shirt. On the front was emblazoned the Worldcoin logo and the words “unique human.”

Over the next three hours, a steady trickle of people arrived for their own appointments with the Orb, but with a varying degree of knowledge about the project and differing motivations for being there. Of the seven that spoke to WIRED, none had much if any trepidation about their eyes being scanned: There’s no such thing as privacy these days, anyway, I was told. But almost all said they would have given more thought to their decision had Altman not been associated with the project.

“I’m a fan of Sam [Altman] for ChatGPT, so I thought: Let me give it a whirl,” says Greg King, after he had been scanned. “I know a little bit [about the Worldcoin project], but not masses—I thought I’d catch up later.”

Altman was also the attraction for Michael Aldridge, another new signup, who until that morning had never heard of Worldcoin. “I may still have come along,” he said, “but would probably have done some more research.”

Others, even if they had a passing interest in the proof of personhood proposition, were primarily there for the crypto reward. James Bryant explained he was making a calculated gamble on the possibility that Worldcoin might be the next cryptocurrency to skyrocket in value; he was hoping to get in on the ground floor. “I think this might be the next chance,” he said. “It’s the next big bet. How else can you move up the social ladder?”

“It sounds greedy,” said Joe Sims, another new registrant, “but the crypto giveaway [was the reason I came.] I remember hearing about bitcoin 10 years ago, when it cost $8, but ignoring it. Maybe nothing will come of this, and yes, I’ve given up my iris—but it’s only taken five minutes.”

That logic seems to be driving a lot of the interest in Worldcoin. On the Discord server, the talk is almost exclusively about the 25-token “genesis grant”—worth about $50—awarded to those that sign up either within the first week or prelaunch. “It’s been two days already,” wrote one verified user, who was still waiting to receive their payout. “Now it feels like my three days of travel for Orb verification is wasted,” said another, in a similar boat.

Experts in tokenomics—the issuance and supply dynamics of crypto tokens—have expressed concern that the structure of the Worldcoin launch may jeopardize the project’s bold ambitions from the outset, and, potentially, disadvantage regular people that now purchase the token.

The total supply of Worldcoin tokens will be capped initially at 10 billion. Three quarters of that amount will be distributed to users over the next 15-plus years, with the remainder split between Tools for Humanity staff and investors, who must refrain from selling any for at least the next 12 months.