By the age of 30, Sam Bankman-Fried had convinced a million people that he was a safe custodian of their hard-earned cash.
But stood in a Manhattan courtroom on Thursday, head of curly hair bowed, the one-time master of persuasion failed to win over the person who, in that moment, mattered most: a federal judge who would soon consign him to a quarter-century behind bars.
Once embraced by figures such as former US president Bill Clinton and New York mayor Eric Adams, the FTX founder had “presented himself as the good guy, all in favour of appropriate regulation of the crypto industry”, Judge Lewis Kaplan said. “In my view that was an act.”
Indeed, the Sam Bankman-Fried show played no small part in sealing his fate.
In a two-hour hearing, Bankman-Fried’s words came back to haunt him time and again. Kaplan turned the air blue as he reminded the court of Bankman-Fried’s own assessment of his motives in comments to a reporter soon after FTX’s implosion. His public advocacy for tougher crypto rules, Bankman-Fried had confessed, was “just PR”, adding: “fuck regulators”.
Bankman-Fried “made so many public statements before [the trial] that the court believed demonstrated a total lack of the understanding of the seriousness of his crime”, said Rachel Maimin, a former federal prosecutor in the office that charged the FTX founder, now at Lowenstein Sandler.
The comments, she added, suggested “he didn’t seem to grasp the seriousness of his offence”.
As shown through evidence at trial, Bankman-Fried’s rehabilitation campaign was already in full swing in the hours before his cryptocurrency exchange FTX collapsed with an $8bn hole in its balance sheet in November 2022, and continued for months after.
When FTX customers demanded to know the fate of their deposits, he sent dozens of tweets assuring them everything would be OK, and directed others at the exchange to do the same. After he was charged, Bankman-Fried spoke with numerous reporters in an effort to convey his side of the story, and told his version of events to the bestselling author Michael Lewis.
Bankman-Fried’s decision to testify in his own defence at trial — a move most white-collar lawyers do not recommend — also backfired spectacularly.
Not only did he fail to win over the jurors with his account of FTX’s collapse — he was convicted after just a few hours of deliberation on seven counts of fraud and money laundering — but Kaplan concluded on Thursday that Bankman-Fried had lied in testimony about when he knew about the $8bn hole, and the illicit use of customer funds, among other things.
Kaplan also leaned heavily on comments made by Bankman-Fried to his former colleague and erstwhile girlfriend Caroline Ellison, who gave evidence at trial.
She recalled Bankman-Fried had described himself as “risk neutral”, the judge reminded the court, and recollected conversations about “being willing to take large coin flips” as long as there was some potential upside, even “if it came up tails and the world was destroyed”.
Ellison’s memory of Bankman-Fried telling her there was a “5 per cent chance” he could become US president also came up. It was proof, Kaplan said, of Bankman-Fried’s ambition to become a “hugely politically influential [person] in this country”.
Even Bankman-Fried’s private musings were quoted back to him, to disastrous effect. Prosecutor Nick Roos referred to contemporaneous notes made by Bankman-Fried after the FTX bankruptcy, which were filed to the court in advance of sentencing.
“His own writings reveal a plan to relaunch FTX or something similar,” Roos told the court at Thursday’s hearing. “If Mr Bankman-Fried thought the mathematics were justified, he would do it again.”
Widge Devaney, a former federal prosecutor who has appeared in front of Kaplan, said the judge’s comments suggested he viewed Bankman-Fried as somebody with a cynical “Ayn Rand view of the world” who “needs to be kept apart from society for a period of time”.
Not that society appeared to be listening. During his short but spectacular career, Bankman-Fried was the ultimate crypto evangelist, and FTX was meant to make the technology accessible to the masses. His indictment and the company’s swift collapse — deemed by many at the time as a fatal blow to the sector — has been anything but, with global crypto markets booming once again.
Even as Roos decried the “extreme emotional and personal damage” done by Bankman-Fried in court on Thursday, crypto’s animal spirits remained uncowed. Bitcoin was once again trading at near all-time highs. Millions of dollars were being pumped into “meme” tokens such as Dogecoin, Shiba Inu and Pepe, and the amount invested in recently launched crypto ETFs topped $70bn worldwide.
Sunil Kavuri, a former FTX customer who had flown in from London to underline the impact the exchange’s collapse had on him and others, seemed more exercised by the fact that he could no longer access his crypto assets than regretful that he invested in the sector to begin with. “It’s our property, we are not unsecured creditors,” he told Kaplan at Thursday’s hearing.
To the crypto faithful watching proceedings, Bankman-Fried was just a rotten apple in an otherwise thriving industry.
“This trial is the conclusion of a sorry episode that the market has moved on from. Enron was not a demonstration that all energy markets were fraudulent, nor was [Bernie] Madoff an indicator of all hedge funds” said Michael Silberberg, of crypto hedge fund Alt Tab Capital, after the sentencing. “We believe in the crypto market’s robustness and support the prosecution of bad actors.”
For SBF, as he was widely known, even that assessment was unwarranted. The 32-year-old, who has been helping teach prisoners seeking to get their high school diplomas while awaiting his sentence, showed a hint of emotion when he told the court during a long speech: “I know how people see me . . . and I understand why.”
In the end, none of it was enough. “In the head of this mathematical wizard . . . he was viewing the cost of getting caught, discounted by the probability or improbability . . . of getting away without getting caught,” Kaplan, who has been on the Manhattan federal bench for 30 years, summarised. “That was the game.”
