Sam Bankman-Fried’s spectacular fall from grace will be complete today when the fraudster is sentenced for committing one of the biggest white collar crimes in history.
The 32-year-old will be sentenced today in the Southern District of New York for cheating thousands of crypto investors out of $8 billion through his now-defunct FTX trading platform.
A Manhattan jury convicted him last year of defrauding FTX customers and stealing the money with the help of his Bahamian inner circle, which included his ex-girlfriend and Alameda Research CEO Caroline Ellison.
Federal prosecutors want Bankman-Fried spend between 40 and 50 years in prison. His team insists that he deserves no more than six.
The sentencing hearing, which has been more than a year in the making, will include statements from the victims, as well as those closest to the disgraced financial genius.
That’s how Bankman-Fried started out as a billionaire with a promising future and ended up as a convicted felon now known as the modern-day Bernie Madoff.
How it started
Bankman-Fried, the son of two Stanford professors, had a charming upbringing in California.
In April 2019, after a six-year career in various trading companies, the 27-year-old founded FTX amid the cryptocurrency boom.
He told the world he planned to give away his rapidly amassed fortune when the bubble burst, and was hailed globally for becoming the richest billionaire under 30.
In April 2019, after a six-year career in various trading companies, the then 27-year-old founded FTX amid a cryptocurrency boom.
Venture capitalists lined up to invest in the burgeoning platform and SBF, as it is known, became a poster child for the cryptocurrency world.
The company’s logo became ubiquitous in pop culture.
Then came the “crypto winter” of 2022, wiping out the books as the unpredictable and largely unregulated market crashed.
Behind the scenes, SBF’s parent company, Alameda Research, began borrowing money to invest in companies in an attempt to keep the market going.
Sam Bankman-Fried photographed at the 2022 Super Bowl with singer Katy Perry (far left), actor Orlando Bloom, actress Kate Hudson (far right) and Hollywood agent-turned-investor Michael Kives
Bundchen looked glamorous on stage with Sam Bankman-Fried at the Crypto Bahamas event. The FTX boss looked uncomfortable as she opted for her usual outfit of scruffy shorts and t-shirt.
FTX was good… until it wasn’t
In November 2022, as the walls were closing, SBF tried to reassure investors.
Bankman-Fried’s Nov. 7 tweet would come back to haunt him countless times during his trial.
‘FTX is fine. Assets are fine,’ she wrote.
Less than a year later, FTX co-founder Gary Wang would say the exact opposite on the stand.
“FTX did not have enough assets for client withdrawals,” Wang testified in October 2023. “In fact, FTX did not have enough assets to cover all client holdings…because Alameda had withdrawn a large amount.”
Alameda is a name you will hear a lot. Bankman-Fried founded Alameda Research as a cryptocurrency trading company in 2017. Prosecutors argued that Alameda was the vehicle to steal FTX customer deposits.
The first sign of trouble came on November 2, when cryptocurrency news site CoinDesk published a balance of Alameda.
In November 2022, SBF attempted to reassure the world that its FTX was immune to the market crash.
The FTX exchange was based in the Bahamas penthouse, which went up for sale in November 2022 after the company filed for bankruptcy.
The balance sheet showed that a substantial portion of Alameda’s assets were in FTT, the token owned by FTX. According to keen crypto industry observers, this seemed incredibly risky because the FTT was essentially a currency invented by Bankman-Fried, but it served as collateral for many of the significant loans given to Alameda for trading purposes.
Subsequent attempts by Bankman-Fried and Ellison to downplay the CoinDesk story proved unsuccessful because around November 8, a classic bank run was in full swing. FTX processed billions of dollars in panic withdrawals.
As the chaos continued, rival cryptocurrency exchange Binance offered to buy FTX. FTX users rejoiced.
But it wasn’t meant to be, because after taking a look at FTX’s books, then-Binance CEO Changpeng Zhao pulled out of the deal on November 9, just one day after announcing the potential purchase.
On November 11, the matter was over. FTX went bankrupt and Bankman-Fried stepped down as CEO, leaving John J. Ray to take charge of the company’s liquidation.
Bankman-Fried arrested and detained
Bahamian authorities did not arrest Bankman-Fried until December 12, 2022, a month after FTX imploded. According to many legal professionals, this left him plenty of time to incriminate himself by interviewing anyone who would listen.
One of his most recognizable interviews was with ABC’s George Stephanopoulos, to the point that clips of it were played during the trial. She told Stephanopoulos that he did not know that FTX customer funds were being used to pay Alameda’s credit obligations.
Exclusive photos from DailyMail.com show disgraced FTX boss Sam Bankman-Fried looking stressed on the balcony of his $40 million penthouse in the Bahamas.
Bankman-Fried’s parents are among many awaiting the verdict on their son
About a week after that interview, Bankman-Fried was arrested in the Bahamas. He was briefly detained at Fox Hill Prison, the island’s only government detention center. He was then extradited to the United States, where he was placed under house arrest in his parents’ comfortable home in Palo Alto, California.
That lasted until August 11, 2023, when Judge Kaplan ruled that Bankman-Fried violated his $250 million bail by leaking letters from his ex-girlfriend Caroline Ellison to the New York Times. Prosecutors accused Bankman-Fried of doing this, and the court viewed the leak as his attempt to intimidate Ellison and show her in a bad light before she testified against her.
Bankman-Fried has since been locked up in the Brooklyn Metropolitan Detention Center.
Highlights of the trial
Bankman-Fried’s trial in October lasted a month and the government called more than a dozen witnesses in addition to the three defense witnesses. The most explosive testimony came from other FTX executives, including his ex-girlfriend Caroline Ellison.
The government claimed that billions of dollars in customer money were funneled from FTX to Alameda to pay off the incredible loans it had taken out from cryptocurrency lenders.
Naturally, as CEO of Alameda, Caroline Ellison arguably had some of the most explosive testimonies.
Sam Bankman-Fried stands as the jury foreman reads the verdict after his fraud trial on Thursday.
Caroline Ellison, photographed in Manhattan Federal Court in Manhattan, New York, on October 10, said she committed fraud and was “ordered” to do so by Bankman-Fried.
Their fate now rests in the hands of U.S. District Judge Lewis Kaplan, the no-nonsense judge who presided over Donald Trump’s E. Jean Carroll case.
Ellison testified in October that Alameda accepted deposits from FTX for “anything” he needed and that Bankman-Fried “directed me to commit these crimes.”
Part of what Ellison said Bankman-Fried ordered him to do was draft seven different balance sheets to send to Genesis, one of Alameda’s largest lenders, when it drew down its $500 million loan to Alameda.
He and Ellison agreed to submit a falsified balance sheet that understated Alameda’s liabilities and omitted any mention that it had borrowed money from the FTX exchange, also known as clients, Ellison testified.
In total, Ellison said Alameda took about $14 billion from FTX customers over the life of the company.
pleas for mercy
Since his arrest and conviction, SBF lawyers have repeatedly asked for leniency.
From his veganism to appeals from his parents and mysterious friends who wanted to secure his release on bail, the once impervious crypto-king has stopped repenting and begging for his freedom.
Their fate now rests in the hands of U.S. District Judge Lewis Kaplan, the no-nonsense judge who presided over Donald Trump’s E. Jean Carroll case.