What next for Sam Bankman-Fried?
The former tech wunderkind – and, until recently, one of the youngest billionaires on the planet – has been convicted of stealing $8bn and is facing a quarter of a century behind bars
Words: Tom Ward
As far as falls from grace go, that of Sam Bankman-Fried is pretty spectacular. And he managed it all by the age of 32. Really, the film adaptation can’t come quick enough. Let’s take a moment to see how Bankman-Fried’s tale of woe stacks up: with a sentence of 25 years behind bars – and charges that carried a maximum term of 110 years – Bankman-Fried’s future claims one of the longest sentences imposed on a white-collar criminal. He’s beaten only by Ponzi scheme aficionado Bernie Madoff, who bagged a 150-year sentence in 2009, but died 12 years into his stretch. Meanwhile, Elizabeth Holmes, convicted of defrauding investors in her blood-testing start-up, Theranos, bagged a paltry 11 years and three months, in 2022. If his aim was to spend the rest of his life in the can, Bankman-Fried couldn’t have played it better.
The background
Image: Getty
Born in Stanford, California, in 1992, there’s an added level of irony in that Bankman-Fried is the son of two professors at Stanford Law School. His younger brother, Gabriel, worked on Wall Street and gave traders a bad name when it was discovered that his non-profit, Guarding Against Pandemics, had received the majority of its $35m funding from money his brother stole from Alameda Research. And, though their parents deny any wrongdoing, they’ve also been dragged into Sam’s mess and are currently being sued to hand back gifts valued at $32m, including cash and a home.
The trouble came when Bankman-Fried’s cryptocurrency exchange, FTX, once worth $32bn, filed for bankruptcy in late 2022 amid a shaky time for crypto generally. In order to try and keep the company afloat, FTX used customer funds for sketchy investments through the affiliated Alameda Research hedge fund. The thing is, Bankman-Fried was also using this money to purchase expensive cars, luxury properties in the Bahamas, and for political donations. When customers demanded their money back, an enormous budget shortfall, totalling $8bn, was uncovered, and Bankman-Fried arrested.
FTX had tried to recuperate some of this cash by asking for donations made to politicians and charities to be returned, with interest. As of April, 2023, $7.3bn had been recovered in liquid assets. Bankman-Fried denied any intention to commit fraud.
The trial and sentencing
Ahead of his trial, The Guardian asked whether ‘Bankman-Fried is a crypto criminal mastermind or just an unlucky “math nerd”’. Now, the answer seems clear.
The trial began in early October, 2023, at the Manhattan federal court, with Judge Lewis Kaplan presiding, and Bankman-Fried facing seven counts of fraud and conspiracy. Three FTX executives testified against him as part of plea deals. In November, 2023, he was found guilty on all counts and, this March, was convicted to 25 years in prison out of a maximum of 110 years. However, under something called the First Step Act, and in conjunction with other time credit programmes, such as good behaviour, he’s likely to serve around 18 years.
Image: Getty
With that in mind, Bankman-Fried could be freed at just 50 years old, which leaves plenty of time left to rebuild his life and reputation. However, the court-ordered mandate to repay $11.02bn in forfeiture is likely to put a dent in any plans to return to business.
“A lot of people feel really let down, and they were very let down,” Bankman-Fried said at his sentencing. “I’m sorry about that. I’m sorry about what happened at every stage.”
When will Bankman-Fried leave prison?
Naturally, Bankman-Fried has appealed his conviction. The appeal was logged on 11 April, but the appeals process in any case or country can be a notoriously laborious undertaking and may take years. The appeal seeks to convince the District Court, and maybe even the Supreme Court, that Judge Kaplan made errors that deprived Bankman-Fried of his legal rights. Even if successful, Bankman-Fried won’t leave prison until his mid-thirties at the earliest.
There was also the matter of a second trial on five charges, including bank fraud and bribery brought by federal prosecutors. This trial was scheduled for March, but Bankman-Fried’s legal team has asked for these charges to be dismissed, claiming they were not part of his extradition agreement when he was deported from the Bahamas in December, 2022. In the end, prosecutors decided not to go ahead with the second case. Had the trial gone ahead and Bankman-Fried been convicted again, recommended federal guidelines meant he would not have served any additional time.
Image: Getty
So, some small wins for Bankman-Fried among this catastrophic period. He’s lucky, too, that his sentence was roughly half the 40 to 50 years that federal prosecutors had sought. Still, 25 years is roughly four times more jail time than the six years his defence team had requested.
Judge Kaplan, meanwhile, made it clear that Bankman-Fried should be in jail for a good time yet. Handing down the sentence, Kaplan said Bankman-Fried had an appetite for risk and it was his nature to make dangerous bets. “There is a risk that this man will be in a position to do something very bad in the future,” he said.
Kaplan also accused Bankman-Fried of lying on the witness stand and failing to take responsibility for his crimes. “He regrets that he made a very bad bet about the likelihood of getting caught,” Kaplan said. “But he’s not going to admit a thing.”
Where will Bankman-Fried be held?
As for Bankman-Fried’s future home, he is reportedly currently housed at the Metropolitan Detention Center in Brooklyn, New York, and is due to be sent to a low- or medium-security prison, likely near his parents’ home in the San Francisco Bay Area.
Image: Getty
Anyone hoping for the Bankman-Fried film to include a scene of his attempted escape from Alcatraz is likely to be left disappointed (least of all because they shut it down in 1963). Instead, he may be housed at the Federal Correctional Institution Herlong Camp, a minimum-security prison of just 62 male inmates – or there’s the Federal Correctional Institution Terminal Island, a low-security-level federal prison located in San Pedro.
Then again, there are 13 standalone prisons and eight federal prison camps in California alone, so it’s difficult to pinpoint where exactly Bankman-Fried’s new home from home will be. According to the website federalcriminaldefenseattorney.com, many minimum-security prison camps are open, without barriers between the prison and the free world.
‘Access to the library, email, and recreation are expanded,’ the site notes. ‘For example, inmates can walk the track, play basketball, work out in the gym, and move around the facility much easier.’
So, maybe the Bankman-Fried film will include a Papillon-like escape. Or maybe Bankman-Fried will get really good at scoring three-pointers. Or maybe, just maybe, given his privileged position and upcoming appeal, he’ll be out sooner than we think.
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