Sam Bankman-Fried Sentenced To 25 Years In Massive Crypto Fraud

Highlights

• Sam Bankman-Fried (SBF) went from an estimated net worth of $26.5 billion to a prison jumpsuit in record time, making him a cautionary tale of crypto fraud.
• His FTX exchange was a game-changer until it unraveled, with billions lost, and a 25-year sentence to show for it.
• Like other fallen billionaires, SBF joins a list of wealthy fraudsters who faced consequences for their crimes.

Convicted cryptocurrency fraudster Sam Bankman-Fried once lived in the lap of luxury in a $35 million penthouse, overlooking the turquoise-blue waters of the Bahamas.

Bankman-Fried (SBF) never "dressed well," preferring a "schlubby" uniform of stretched-out gray T-shirts, cargo shorts, and white running socks rolled down to the ankles to the well-tailored suits favored on Wall Street.

On March 27th, however, SBF, as he became known to the world, traded that uniform in for a federal prison jumpsuit, to begin his 25-year sentence for bilking billions out of gullible investors.

SBF founded the cryptocurrency exchange FTX, and the crypto trading company Alameda Research.

To break it down: "FTX and SBF invented the notion of the 100 percent algorithmic exchange. Algorithms determined how much leverage you could have, and on FTX they determined it in real time."

SBF's technology offered "unbelievable functionality for institutional traders," according to efinancialcareers.com, and the exchange's ease of use made FTX "the dominant exchange for crypto derivatives trading" from its inception in 2019.

What Is 'Derivatives Trading'?: According to Investopedia.com : "The term derivative refers to a type of financial contract whose value is dependent on an underlying asset, group of assets, or benchmark.

"A derivative is set between two or more parties that can trade on an exchange or over-the-counter (OTC) ... Common derivatives include futures contracts, forwards, options, and swaps."

Trading technicalities aside, the fact remains that Sam Bankman-Fried's net worth reached a monstrous $26.5 billion within a few years, and he was ranked the twenty-fifth richest person in America ... before it all came crashing down.

All it took was "one week in [November] 2022" for SBF to lose it all and face charges of fraud and conspiracy.

In addition to his sentence, SBF was ordered to pay $11 billion in forfeitures, which is different from restitution, and does not go directly to those directly impacted by the fall of FTX.

United States Federal District Court Judge Lewis Kaplan said it would be "impractical" to order restitution, because the case was too complicated and the pool of affected investors too vast.

Kaplan did, however, indicate that the government could use funds generated by the liquidation of Bankman-Fried's seized assets to compensate victims of the multi-billion dollar scheme.

SBF has finally broken his silence, writing in a recent Substack post: "I didn’t steal funds, and I certainly didn’t stash billions away." In the same post, Bankman-Fried endeavored to explain exactly what happened to investors' billions.

With his sentencing, 32-year-old SBF joined an exclusive club of billionaires behind bars for defrauding customers and investors.

So, where does the disgraced wunderkind rank among his fellow white-collar criminals?

Editor’s note: This article contains brief mentions of sexual assault, abuse, or other related topics that could be triggering to some readers and survivors. If you or someone you know is in need of assistance, please visit RAINN.org. The National Sexual Assault Hotline (1-800-656-4673) is available 24/7.

2:03

Judge Dismisses $1M 'Hotel California' Lyrics Lawsuit, Slams Eagles' Frontman Don Henley

From Private Planes To Prison Cells

According to a Forbes blogger, SBF is the latest addition to "an infamous list of at least [eleven] billionaires and former billionaires that have served (or will soon serve) time behind bars."

Also on the list is Theranos founder Elizabeth Holmes and the Mexican cartel boss known as "El Chapo."

$200B Man Elon Musk Claims He Won't 'Share The Wealth' With Trump Or Biden

Billionaire Baddies

Thanks to wealth reporter Devin Sean Martin, we have a comprehensive list of where SBF falls on the list of "billionaire baddies."

S. Curtis Johnson: Great Great Grandson Of SC Johnson Patriarch

Estimated Net Worth: $4.5 Billion

S. Curtis Johnson was sentenced to four months in prison in 2011 on charges of sexually assaulting his then-teenage stepdaughter.

The billionaire initially faced a sentence of 40 years, but took a "sweetheart plea deal": a plea of guilty on charges of fourth-degree sexual assault and disorderly conduct charges in exchange for four months in jail and a $6,000 fine.

Ultimately, Johnson served just three months of his sentence.

Jay Y. Lee: Heir To The Samsung Fortune

Estimated Net Worth: $8.6 Billion

Lee was sentenced to five years for bribery.

A South Korean court found that Lee bribed the country's then-President Park Geun-hye to support a merger between Samsung C&T and Cheil Industries.

That sentence was suspended, and Lee ultimately served 18 months before being released on parole in August 2021.

John Kapoor: Founder Of Fentanyl Manufacturer Insys Therapeutics

Estimated Net Worth: No Longer A Billionaire (Was Worth $3.5 Billion In 2015)

Kapoor was sentenced to a term of five and a half years in 2020, for conspiring to bribe doctors to prescribe the fentanyl spray, Subsys.

Kapoor's scheme is believed to have exacerbated the opioid crisis in America, which has taken more than 560,000 645,000 lives to date in the United States alone.

Kapoor spent just three and a half years behind bars before being released to home confinement.

Kapoor's net worth dipped below a billion in 2018, and Insys Therapeutics went bankrupt in 2019.

The Sackler Saga: Purdue Pharma, Opioids, And The $6 Billion Dilemma

Thomas Kwok: Inherited Hong Kong Real Estate Firm Sun Hung Kai Properties

Estimated Net Worth: $1.9 Billion

Thomas Kwok was sentenced to seven and a half years in 2014 on charges of bribing Hong Kong's then-chief secretary, Rafael Hui, for $1.1 million, in exchange for "government favor."

Kwok served more than three years before being released from prison in 2019.

Michael Milken: Junk Bond Financier Of Investment Bank Drexel Burnham Lambert

Estimated Net Worth: $6.5 Billion

Michael Milken was sentenced to ten years after pleading guilty to six counts of securities and tax-related violations.

Milken served two years in prison, and was ordered to pay $600 million in fines. Milken was banned for life from the securities industry.

Elizabeth Holmes: Founder Of Medical Device Company Theranos

Estimated Net Worth: No Longer A Billionaire, Was Worth $4.5 Billion In 2014

Elizabeth Holmes was sentenced to eleven years in prison after being convicted of fraud and conspiracy.

Holmes was indicted for allegedly misleading investors about a blood-testing invention she dubbed "Edison," and the United States Department Of Justice (DoJ) explained in a press release:

"According to the indictment, the defendants also allegedly made numerous misrepresentations to potential investors about Theranos’s financial condition and its future prospects. For example, the defendants represented to investors that Theranos conducted its patients’ tests using Theranos-manufactured analyzers; when, in truth, Holmes and Balwani knew that Theranos purchased and used for patient testing third party, commercially available analyzers.

"The defendants also represented to investors that Theranos would generate over $100 million in revenues and break even in 2014 and that Theranos expected to generate approximately $1 billion in revenues in 2015; when, in truth, the defendants knew Theranos would generate only negligible or modest revenues in 2014 and 2015."

Holmes was ordered to pay $452 million in restitution to her investors, and is currently serving her sentence.

Raj Rajaratnam: Founder Of The Hedge Fund Galleon Group

Estimated Net Worth: No Longer A Billionaire, Was Worth $1.3 Billion In 2009

Raj Rajaratnam was sentenced to eleven years in prison on charges of insider trading. He was convicted on 14 counts of fraud and conspiracy.

Rajaratnam served eight years behind bars before being released to home confinement in 2019.

The Richest Hedge Fund Managers In The World, Ranked

Mikhail Khodorkovsky And Platon Lebedev: Business Partners In Yukos, A Russian Oil And Gas Company

Estimated Net Worth: No Longer Billionaires, Khodorkovsky Was Worth $15 Billion In The 1990s

Mikhail Khodorkovsky and Platon Lebedev were sentenced to 13 years each on charges of tax evasion, then re-convicted on charges of embezzlement and money laundering.

Each spent ten years behind bars. As Russian citizens, the pair claimed that the justice system was rigged against them by Russian President Vladimir Putin.

Allen Stanford: Stanford International Bank, Antigua

Estimated Net Worth: No Longer A Billionaire, Was Worth $2.2 Billion In 2008

Allen Stanford was sentenced to 110 years after he was convicted of selling $7 billion of fraudulent certificates of deposits (CoDs), and his case was considered to be one of the largest Ponzi schemes in history.

Stanford was ordered to pay a judgment of $6 billion to his victims, but many reportedly have not received any money.

Stanford has been behind bars for the past 13 years.

Joaquín Guzmán Loera (AKA 'El Chapo'): Mexican Cartel Kingpin

Estimated Net Worth: No Longer A Billionaire, Was Worth An Estimated $1 Billion Before His 2014 Arrest

El Chapo (Joaquín Guzmán Loera) was the leader of Mexico's Sinaloa Cartel.

He was convicted on ten counts of narcotics trafficking and money laundering, and sentenced to life plus 30 years in the United States' federal prisons.

"El Chapo" (whose nickname means "Shorty") was also ordered to pay $12.6 billion in restitution. He has been in the custody of the federal prison system since 2019.

With a sentence of 25 years, Sam-Bankman Fried ranks third for the longest prison sentence among "billionaire baddies," behind El Chapo and Allen Stanford.

ncG1vNJzZmivp6x7tbTEq6CcoJWowW%2BvzqZmrJmdYq%2BiusqmmKdllqe2prCMrJynrJWjsKawjg%3D%3D