Sam Bankman-Fried sentence: After years of ‘hubris, incompetence and greed’, crypto king’s jail term is end of an era
Sam Bankman-Fried was breathlessly described as a wunderkind – a boy wonder transforming the world of finance.
Renowned for his messy hair and unkempt appearance, he graced the covers of Forbes and Fortune, who pondered whether he could become the next Warren Buffett.
The 32-year-old was the founder of FTX, which had quickly become the world’s second-largest cryptocurrency exchange – a place where investors could buy and sell digital assets like Bitcoin.
Larry David appeared in an advert for FTX during the Super Bowl in 2022
Star-studded adverts featuring the tennis player Naomi Osaka and the comedian Larry David added to its allure – with eye-watering sums spent on sponsorship deals.
But in November 2022, Bankman-Fried’s crypto empire came crashing down after it emerged that customer funds worth $10bn (£7.9bn) was missing.
A year later, a jury convicted the fallen entrepreneur of fraud and money laundering after just five hours of deliberations – based on evidence from close colleagues who had turned against him.
Now, “SBF” is beginning a lengthy prison sentence of 25 years for what prosecutors have described as “one of the biggest financial frauds in American history”.
His punishment may be little comfort to five million FTX customers who were suddenly locked out of their accounts as the company entered bankruptcy – and are yet to receive any compensation.
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November: ‘Crypto king’ guilty of fraud
An estimated 80,000 of Bankman-Fried’s victims were based in the UK. Some of them had millions of pounds tied up in the company after entrusting him with their life savings.
While slick marketing campaigns had presented FTX as a safe way to invest in volatile cryptocurrencies, the reality behind the scenes couldn’t have been more different.
Secret back doors had been established that allowed SBF’s other company, Alameda Research, to access money belonging to FTX customers and make risky bets without their knowledge.
Meanwhile, executives were spending lavishly. Private jets ferried Amazon orders from Miami to the firm’s headquarters in the Bahamas, £12m was spent on luxury hotel stays in just nine months, and employees in the US were allowed to order £160 of food deliveries each a day.
The fallout from FTX’s demise also reaches as far as the White House. Bankman-Fried was one of the largest donors to Joe Biden’s campaign in 2020, with the president subsequently facing pressure to return millions of dollars.
Read more:
Who is Sam Bankman-Fried?
SBF ‘wanted to be US president’
Sam Bankman-Fried’s colleague and on-off girlfriend Caroline Ellison testified against him. Pic: Reuters
A new chief executive has been tasked with untangling where all the money went. Soon after FTX went under, he said: “Never in my career have I seen such a complete failure of corporate controls.”
Unusually, and thankfully, FTX victims are expected to be compensated in full eventually – kind of.
The payouts they receive will be based on what cryptocurrencies were worth in November 2022. But Bitcoin was trading at £16,000 back then and is now worth £55,500.
Bizarre plans to bring FTX out of bankruptcy and reopen the exchange have also been abandoned.
Other entrepreneurs in this space – who had loyal, cult-like followings and huge profiles – are also facing jail time.
Changpeng Zhao has pleaded guilty to money laundering charges. Pic: Reuters
Changpeng Zhao, who ran the world’s biggest crypto exchange Binance, sensationally resigned last year after pleading guilty to money laundering violations in the US.
His company had allowed individuals in Syria, Iran and Russian-occupied parts of Ukraine to evade economic sanctions – and allegedly made it easy for terrorists and criminals to move money.
The billionaire faces jail time when he is sentenced next month.
Do Kwon created two cryptocurrencies that spectacularly collapsed in May 2022, with investors losing an estimated $40bn (£31.7bn) in a matter of days.
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He later went on the run but was captured in Montenegro last year after attempting to fly to Dubai using a fake passport.
A civil fraud trial against Kwon and his company Terraform Labs began this week, with prosecutors warning: “Terra was a fraud, a house of cards, and when it collapsed, investors nearly lost everything.”
Do Kwon created two cryptocurrencies that lost tens of billions of dollars – then went on the run. Pic: Reuters
In a way, Bankman-Fried’s sentence marks the end of an era for crypto – when extravagant excesses and a lack of regulatory oversight were the norm.
Bitcoin’s recent gains have been driven by regulated products that allow investors to gain exposure to the cryptocurrency’s price without owning it directly.
And many of these products are offered by established, traditional finance firms like BlackRock, which is the world’s largest asset management company.
A damning report described the rise and fall of FTX as a tale of “hubris, incompetence and greed” – with Bankman-Fried and his inner circle showing little regard for the financial wellbeing of his customers.
Millions of people had their fingers burned, and many will be put off from ever investing in cryptocurrencies again.
But while the industry has learned some lessons, the crypto market’s rapid surge in recent months mean there’s a real risk of another bubble forming – and new bad actors taking advantage of investors looking for a piece of the action.
World
President Raisi’s death a perilous moment for Iran regime – but don’t expect a change to foreign policy
This is a delicate time for Iran. President Raisi was the second most important man in Iran, after Supreme Leader Ayatollah Ali Khamenei.
His death, now confirmed, will have far-reaching consequences.
Although Khamenei has tried to reassure the country in recent hours, the regime will know this is a perilous moment that must be handled carefully.
Live updates – Iranian president killed in crash
There are mechanisms to protect the regime in events like this and the Revolutionary Guard, which was founded in 1979 precisely for that purpose, will be a major player in what comes next.
In the immediate term, vice-president Mohammed Mokhber will assume control and elections will be held within 50 days.
Mokhber isn’t as close to the supreme leader as Raisi was, and won’t enjoy his standing, but he has run much of Khamenei’s finances for years and is credited with helping Iran evade some of the many sanctions levied on it.
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Drone footage of helicopter crash site
Raisi’s successor will most likely be the chosen candidate of the supreme leader and certainly another ultra-conservative hardliner – a shift back to the moderates is highly unlikely.
Likewise, we shouldn’t expect any significant change in Iran’s foreign activities or involvement with the war in Gaza. It will be business as usual, as much as possible.
However, after years of anti-government demonstrations following the death of Mahsa Amini in 2022, this might be a moment for the protest movement to rise up and take to the streets again.
Read more:
Who was hardliner Iranian president Ebrahim Raisi?
‘Butcher of Tehran’ had fearsome reputation – many will fear instability
Hardline cleric Ebrahim Raisi wins landslide victory
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Islamic State may seek to take advantage
There are also many dissident groups inside Iran, including an off-shoot of Islamic State – they might seek to take advantage of this situation.
Raisi became president in 2021 at the second time of asking and only with a turnout of 41%, the lowest since the 1979 revolution.
The president was considered one of the two frontrunners to succeed Ayatollah Ali Khamanei (pictured). Pic: Reuters
He was not a universally popular figure and many inside Iran will celebrate his death.
Consequences for supreme leader
Longer term, Raisi’s death will have consequences for the supreme leader.
He was considered one of the two frontrunners to succeed Ayatollah Ali Khamanei on his death – the other being Khamanei’s son Mojtaba.
For religious and conservative Iranians, Raisi’s death will be mourned; for many though, it will be the passing of a man who had blood on his hands.
World
Iranian President Ebrahim Raisi confirmed dead in helicopter crash after charred wreckage found
Iranian President Ebrahim Raisi has died after the helicopter he was travelling in crashed in a mountainous area of northwest Iran.
Rescuers found the burned remains of the aircraft on Monday morning after the president and his foreign minister had been missing for more than 12 hours.
“President Raisi, the foreign minister and all the passengers in the helicopter were killed in the crash,” a senior Iranian official told Reuters, asking not to be named.
Live updates – Iranian president killed in crash
Iran‘s Mehr news agency reported “all passengers of the helicopter carrying the Iranian president and foreign minister were martyred”.
State TV said images showed it had smashed into a mountain peak, although there was no official word on the cause of the crash.
“President Raisi’s helicopter was completely burned in the crash… unfortunately, all passengers are feared dead,” an official told Reuters.
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President of Iran killed in crash
The crash happened in Iran’s East Azerbaijan province
As the sun rose, rescuers saw the wreckage from around 1.25 miles, the head of the Iranian Red Crescent Society, Pir Hossein Kolivand, told state media.
Iranian news agency IRNA said the president was flying in an American-made Bell 212 helicopter.
Read more:
Who is Iranian President Ebrahim Raisi?
Many will be fearing instability after ‘butcher of Tehran’ killed
Iranian TV showed the president on the helicopter during a trip to Azerbaijan
TV pictures from Sunday showed thick fog at the search site. Pic: IRNA
Mr Raisi, 63, who was seen as a frontrunner to succeed Ayatollah Ali Khamenei as Iran’s supreme leader, was travelling back from Azerbaijan where he had opened a dam with the country’s president.
Iran’s foreign minister, Hossein Amirabdollahian, also died in the crash.
The governor of East Azerbaijan province and other officials and bodyguards were also said to have been on board when the helicopter crashed in fog on Sunday.
Iranian media initially described it as a “hard landing”.
The chief of staff of Iran’s army had ordered all military resources and the Revolutionary Guard to be deployed in the search, which had been hampered by bad weather.
India’s Prime Minister Narendra Modi was among the first to react to the news of Mr Raisi’s death.
“India stands with Iran in this time of sorrow,” he said in a post on X.
A helicopter carrying Iran’s president crashed during bad weather on Sunday.
But who is Ebrahim Raisi – a leader who faces sanctions from the US and other nations over his involvement in the mass execution of prisoners in 1988.
The president, 63, who was travelling alongside the foreign minister and two other key Iranian figures when their helicopter crashed, had been travelling across the far northwest of Iran following a visit to Azerbaijan.
Follow live: Rescuers search for president after helicopter crash
Mr Raisi is a hardliner and former head of the judiciary who some have suggested could one day replace Supreme Leader Ayatollah Ali Khamenei.
Because of his part in the sentencing of thousands of prisoners of conscience to death back in the 1980s, he was nicknamed the Butcher of Tehran as he sat on the so-called Death Panel, for which he was then sanctioned by the US.
Raisi and Azerbaijan’s President Ilham Aliyev on Sunday. Pic: Reuters
Both a revered and a controversial figure, Mr Raisi supported the country’s security services as they cracked down on all dissent, including in the aftermath of the 2022 death of Mahsa Amini – the woman who died after she was arrested for allegedly not wearing her hijab properly – and the nationwide protests that followed.
The months-long security crackdown killed more than 500 people and saw over 22,000 detained.
People light a fire during a protest over the death of Mahsa Amini in Tehran, 2022. Pic: Reuters
In March, a United Nations investigative panel found that Iran was responsible for the “physical violence” that led to Ms Amini’s death after her arrest for not wearing a hijab, or headscarf, to the liking of authorities.
The president is seen as a frontrunner to replace Iran’s Supreme Leader Ayatollah Ali Khamenei (pictured). Pic: Reuters
The president also supported Iran’s unprecedented decision in April to launch a drone and missile attack on Israel amid its war with Hamas, the ruling militant group in Gaza responsible for the 7 October attacks which saw 1,200 people killed in southern Israel.
Involvement in mass executions
Mr Raisi is sanctioned by the US in part over his involvement in the mass execution of thousands of political prisoners in 1988 at the end of the bloody Iran-Iraq war.
Under the president, Iran now enriches uranium at nearly weapons-grade levels and hampers international inspections.
Iran has armed Russia in its war on Ukraine and has continued arming proxy groups in the Middle East, such as Yemen’s Houthi rebels and Lebanon’s Hezbollah.
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He successfully ran for the presidency back in August 2021 in a vote that got the lowest turnout in the Islamic Republic’s history as all of his potentially prominent opponents were barred from running under Iran’s vetting system.
A presidency run in 2017 saw him lose to Hassan Rouhani, the relatively moderate cleric who as president reached Tehran’s 2015 nuclear deal with world powers.
‘Very involved in anything’
Alistair Bunkall, Sky News’s Middle East correspondent, said the president is “a major figure in Iranian political and religious society” but “he’s not universally popular by any means” as his administration has seen a series of protests in the past few years against his and the government’s “hardline attitude”.
Mr Raisi is nonetheless “considered one of the two frontrunners to potentially take over” the Iranian regime when the current supreme leader dies, Bunkall said.
He added the president would have been “instrumental” in many of Iran’s activities in the region as he “would’ve been very involved in anything particularly what has been happening in Israel and the surrounding areas like Lebanon and Gaza and the Houthis over the last seven and a bit months”.
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