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.
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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.
An Arizona man who buried his wife alive in a hand-dug grave near their home has been jailed for life.
Seven years after the killing, David Pagniano pleaded guilty to murdering his wife before his trial was due to start and allowed a judge to determine his sentence without a plea agreement.
The 62-year-old was handed a life sentence without the possibility of parole, meaning he will die in prison.
He was also sentenced on 9 May to 16-and-a-half years for kidnapping, forgery and fraud, according to the Yavapai County Attorney’s Office.
“My office pursued the death penalty in this case because of the horrific circumstances surrounding the abduction and murder of a young mother,” County Attorney Dennis McGrane said in a statement.
Authorities said 39-year-old Sandra Pagniano vanished while she was in the process of divorcing her husband in May 2017.
They said the pair were separated but still living in the same home with their two young daughters.
Ms Pagniano’s body was found bound and gagged in packing tape inside a grave in a rural area north of Prescott.
The county medical examiner’s office confirmed she had been buried alive.
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Victim may have been conscious for up to five minutes
Officials said evidence showed she vigorously struggled while she was in the grave and may have been conscious for up to five minutes.
In addition, mobile phone evidence showed Pagniano was in the gravesite area days before his wife went missing and the night of the kidnapping.
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Forensic examination of notes revealed they were fake
Detectives recovered two notes that were filed in the divorce case following Mrs Pagniano’s disappearance, purportedly written by her.
The notes said she was leaving her husband and giving him her vehicles, house and custody of their children.
But authorities said a forensic examination of the notes revealed they were written by Pagniano.
A grand jury indicted him on a charge of first-degree murder after his wife’s body was discovered in a remote area 10 miles (16km) northwest of the family home near Prescott in north-central Arizona.
Sean “Diddy” Combs has said CCTV footage showing him attacking singer Cassie in a hotel hallway in 2016 is “inexcusable” and that he is “disgusted”.
Warning: This story includes images readers may find distressing
“It’s so difficult to reflect on the darkest times in your life, but sometimes you got to do that,” the rapper said in a video on Instagram.
“I was f***** up – I mean I hit rock bottom – but l make no excuses. My behaviour on that video is inexcusable. I take full responsibility for my actions in that video. I was disgusted. I was disgusted then when I did it. I’m disgusted now.
“I went and I sought out professional help. I got into going to therapy, going to rehab. I had to ask God for his mercy and grace. I’m so sorry. But I’m committed to be a better man each and every day. I’m not asking for forgiveness. I’m truly sorry.”
Pic: CNN via AP
Pic: CNN via AP
The 54-year-old, whose homes in Los Angeles and Miami were raided by Homeland Security Investigations agents in March, has faced a series of public allegations of physical and sexual violence.
Footage obtained by CNN this week shows Combs – also known as P Diddy and Puff Daddy – wearing only a white towel as he punches and kicks Cassie in a Los Angeles hotel hallway on 5 March 2016.
The footage also shows Combs shoving and dragging the singer and throwing a vase in her direction.
Pic: CNN via AP
Cassie, an R&B singer whose legal name is Cassandra Ventura, was his protege and girlfriend at the time.
The 37-year-old sued Combs in November with the lawsuit accusing him of rape and violent behaviour during their decade-long relationship.
The suit was settled the next day, but it led to intense scrutiny of Combs, who has since been named as a defendant in several sexual abuse lawsuits, along with a federal criminal sex-trafficking investigation that led authorities to the raid in March.
Sean Combs and Cassie in 2017. Pic: PA
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Diddy’s homes raided
He denied the allegations in the lawsuits, but neither he nor his representatives had responded to the newly-emerged video until Sunday.
After the footage emerged, Douglas H Wigdor, lawyer for Ms Ventura, said in a statement in response: “The gut-wrenching video has only further confirmed the disturbing and predatory behaviour of Mr Combs.
“Words cannot express the courage and fortitude that Ms Ventura has shown in coming forward to bring this to light.”
Combs’ Instagram apology is the hip hop mogul’s most direct response after six months of allegations that have threatened his reputation and career.
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Sean ‘Diddy’ Combs. Pic: AP
Previous statements have been released through his lawyers.
The security camera video, dated 5 March 2016, closely resembles the description of an incident at an InterContinental Hotel in the Century City area of Los Angeles described in Ms Ventura’s November lawsuit.
The suit alleges that Combs paid the hotel $50,000 (around £39,000) for the security video immediately after the incident.
Neither he nor his representatives have addressed that specific allegation.
CNN did not say how it obtained the footage.
Combs is not in danger of being criminally prosecuted for the beating.
The statutes of limitations for the assault and battery charges he would have been likely to face expired years ago.
US
Adam Boulton: ‘Like those old guys on The Muppets’ – bad sign for democracy as Trump and Biden call shots on how they will debate
That was easy. Donald Trump and Joe Biden duelled briefly over the airwaves about debating.
“Any time, any place, anywhere,” the Republican candidate had challenged. “Make my day, pal” the president retorted movie-style.
In just a matter of hours the two men agreed to Joe Biden‘s proposal for two televised presidential debates before the election on 5 November – at CNN HQ in Atlanta on 27 June and on ABC forum on 10 September.
There will be more role-playing between now and the agreed showdowns. Biden has already rejected Trump’s counter-offer of two further debates including one on Fox News.
But once again the US does seem on course to hold debates between the frontrunners for the White House, as it has in most of the presidential cycles since JFK took on Richard Nixon in 1960. The UK has only managed to hold proper equivalent prime ministerial leaders debates in 2010.
The two candidates will confront each other in different circumstances than previously. They will meet earlier in the cycle of the election year and without the usual rules.
Both sides have agreed to cold shoulder the widely respected Commission on Presidential Debates (CPD), which had proposed three debates before mass audiences closer to polling day.
The Republicans and the Democrats have decided that the CPD model is outdated because of the changing nature of campaigning and voting, the evolving demands of the media and above all because of the unique nature of this campaign in which the two main candidates have become clear so early in the year and in which they are the oldest in America’s political history.
“It’ll be entertaining, informative. Like those two old guys on The Muppets,” former Republican presidential candidate Mitt Romney quipped to Huffpost.
Pic: Disney/Kobal/Shutterstock
The traditional CPD debates are one of the many norms of US politics which have been subverted by Donald Trump.
According to opinion polls held afterwards as to “who won the debate?”, he is a poor debater.
He “lost” all three of his encounters with Hillary Clinton in 2016 and both of his debates against Biden in 2020.
Biden also “won” both his vice presidential debates against Sarah Palin in 2008 and Paul Ryan in 2012.
Yet what is remembered is Trump’s behaviour. He roamed about the stage and loomed threatening behind Hillary Clinton.
He invited her husband’s alleged ex-girlfriends to sit in the front row of the audience.
He called Biden “demented” before their first debate and abused him to his face, saying: “There’s nothing smart about you Joe.”
Trump refused to abide by the rules and talked over the moderator and Biden.
A senior White House correspondent summed up their first presidential debate as “a hot mess, inside a dumpster fire, inside a train wreck”.
Trump refused to take the required COVID test to take part and then developed it, resulting in the cancellation of their next scheduled debate.
At their final debate, a technician was employed to switch off the participants’ microphones except during their allotted speaking time.
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It is usually the underdog who issues the challenge to debate. Biden has been trailing narrowly in key opinion polls and needs the debates to demonstrate that he is still up to the job at the age of 81.
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Many observers think that the president is actually showing fewer signs of cognitive impairment than Trump, who is only four years younger and whose rally speeches are becoming increasingly incoherent rants.
When the two men debate this summer, Biden may well “beat” Trump again. But Trump’s antics could well dominate – and they certainly impress some voters.
The problems with the debates four years ago explain why neither side wants to put the commission in charge this time.
The Republicans have accused the CPD of bias and the Democrats blame it for not keeping order.
Significantly the first debate this year, on CNN, will be in a studio without a live audience for the first time in the US presidential history.
Both sides also wanted to have their encounters earlier in the summer because there is an increasing trend to vote earlier, with some states opening their polls as early as September.
Biden and Trump during a presidential debate in Nashville in 2020. Pic: Reuters
The agreed debates will be head-to-heads between Biden and Trump, which suits them both because Robert F Kennedy Jnr is working flat out to get on enough state ballots to qualify for a CPD debate.
Polling suggests he would take votes from each of them and could have a decisive impact on who wins.
President Biden gift wrapped his debate invitation with the cheeky tag “I hear you are free on Wednesdays” because the criminal court where Trump is currently on trial does not sit on Wednesdays.
The dates they’ve agreed are actually a Tuesday and a Thursday but the dig still stands.
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The first Biden-Trump debate in 2020 drew 71 million viewers in the US making it the third most-watched presidential debate behind only Trump and Hillary Clinton in 2016 and Ronald Reagan versus Jimmy Carter in 1980.
But average audiences for the debates are diminishing.
Nate Silver, a leading political statistician, points out they are one of the few fixed points in a campaign which can have some direct impact today when “almost nothing moves the polls these days because the candidates are so well known and everybody is so partisan”.
America’s news networks have found out that Trump drives up ratings, even when the station’s editorial policy opposes him.
CNN gave his rallies saturation coverage in 2016 and apologised more recently when Trump was allowed to monopolise a “town hall” on the channel.
Now the networks and their guest debaters have parted company with the protections provided by the CPD and its heavily regulated debates before live audiences on university campuses.
They will be under pressure to show they can provide fair and informative programmes for their viewers and not just entertainment.
The precedents for success are not good from the UK, where broadcasters abandoned working together following a rigid formula after 2010.
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By competing against each other they effectively gave the whip hand to the politicians, who were free to withdraw or bestow their favours.
Since then the subsequent debate-style election programmes have not made a significant informative or influential impact on the campaigns. The viewers, a.k.a the electorate, have lost out.
This year the two people vying to be the leader of the free world are calling the shots on how they will debate.
It is hardly encouraging for democracy that a senior senator like Mitt Romney’s first comparison is with The Muppet Show.
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