Disgraced FTX founder could face up to 50 years in prison for $8 billion fraud

Ex-FTX chief could face up to 50 years for $8 billion customer fraud. Judge to decide sentence next week.

Disgraced FTX founder could face up to 50 years in prison for $8 billion fraud
Sam Bankman-Fried

Sam Bankman-Fried, the former billionaire founder of the collapsed cryptocurrency exchange FTX, could face up to 50 years behind bars. Prosecutors requested this harsh sentence in a sentencing memorandum filed on Friday.

Bankman-Fried, 32, was convicted in November on seven counts of fraud and conspiracy related to FTX's demise. Prosecutors in Manhattan argued he orchestrated an $8 billion fraud scheme, using customer funds for personal gain.

"Thousands of ordinary people lost their savings – their nest eggs – that they had entrusted to FTX," the prosecutors wrote. These losses included people from war-torn and unstable countries.

They underlined Bankman-Fried's continued denial of wrongdoing, stating, "Even now Bankman-Fried refuses to admit his actions were wrong." They portrayed him as a figure driven by "greed and hubris," who repeatedly gambled with other people's money.

Prosecutors are also seeking $11 billion in compensation, aiming to recoup losses suffered by FTX investors and lenders.

In contrast, Bankman-Fried's lawyer requested a significantly more lenient sentence of 5 to 6 years. The lawyer maintains that customers will eventually recover most of their lost funds.

A spokesperson for Bankman-Fried confirmed a response to the prosecution's memorandum will be filed next week.

Judge Lewis Kaplan is scheduled to deliver the sentence on March 28th at the Manhattan federal court. Bankman-Fried is expected to appeal both the conviction and the sentence.

The fall from grace for Bankman-Fried is dramatic. Once a rising star in the cryptocurrency industry, he saw his fortune evaporate alongside FTX in November 2022 when a wave of customer withdrawals triggered a liquidity crisis and ultimately led to the company's bankruptcy.

Prosecutors highlighted Bankman-Fried's privileged upbringing and education as factors justifying a harsher sentence. They claim that his background equipped him to understand the illegality of his actions.

Subscribe to Investomania for more cryptocurrency news and updates.