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.
There are 161 people still missing in Texas in the aftermath of last weekend’s deadly flash floods, the state’s governor has said.
Speaking at a news conference on Tuesday, governor Gregg Abbot said the number of missing had risen markedly.
He said among the missing were five children and one counsellor from Camp Mystic – where at least 27 people were killed in the flash flooding.
At least 109 people are confirmed to have died in the floods, which took place on the 4 July weekend, but this figure has been steadily climbing ever since.
People comforted each other in Kerville. Pic: Jason Fochtman/Houston Chronicle via AP
The bulk of deaths, and the main search for additional bodies, have been concentrated in Kerr County and the city of Kerrville.
The area was transformed into a disaster zone when torrential rains struck the region early last Friday, unleashing deadly flooding along the Guadalupe River.
Travis County, Kendall County, Burnett County, Williamson County, and Tom Green County were also hit.
Mr Abbot said many of those who were unaccounted for were in the Texas Hill Country area, but had not registered at a camp or hotel, posing further challenges for authorities.
Camp Mystic
Mr Abbot planned to make another visit to Camp Mystic.
The century-old all-girls Christian summer camp was badly hit by the flash floods, with at least 27 campers and counsellors dying.
Hanna Lawrence, left, and Rebecca Lawrence, right. Pic: John Lawrence/AP
Lila Bonner (L) and Eloise Peck both died in the flash floods at Camp Mystic, Texas. Pic: Family handout
Chloe Childress. Pic: Debra Alexander Photography via AP
Some of the victims include Hanna and Rebecca Lawrence, both eight, Chloe Childress, 19, who was among the counsellors at Camp Mystic when the flood hit, and Eloise Peck and Lila Bonner, both nine.
There were scenes of devastation at the camp as the flood water receded.
Outside the cabins where the girls had slept, mud-splattered blankets and pillows were scattered.
Also in the debris were pink, purple and light blue luggage, decorated with stickers.
A view inside a cabin at Camp Mystic after the flooding. Pic: Ronaldo Schemidt/AFP via Getty Images
Camper’s belongings lie on the ground following flooding on the Guadalupe River, at Camp Mystic.
Pic: Reuters
‘Everything looked flooded and broken’
One of the campers, 10-year-old Lucy Kennedy, told Sky’s US partner network, NBC News, that she woke up to the sound of thunder at around midnight before the floods struck.
“I couldn’t go back to sleep,” she said. “I just had a feeling that something really bad was about to happen.”
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She said the girls at the camp were told to grab blankets, pillows and water bottles and line up single file as the floodwater rose, before getting airlifted to safety.
Wynne Kennedy, Lucy’s mother, added: “When I saw her, she was wrapped up in a blanket, had a teddy bear.
“We just held each other tight, and I held her all night.”
Their home in Kerrville was also destroyed by the flash floods.
Lucy Kennedy, 10 who was rescued from Camp Mystic, and her mother Wynne. Pic: NBC
Political row
Meanwhile, a political row has unfolded parallel to the recovery efforts, with some questioning whether local authorities sent out warnings and alerts early enough.
Similarly, Democrats have criticised Donald Trump over cuts his Elon Musk-launched Department of Government Efficiency (DOGE) has made to the National Weather Service – but it isn’t clear whether these actually made any difference.
Read more:
Sisters killed in Texas flooding found holding hands
Why did deadly Texas floods catch people by surprise?
Wall of water
The flash floods erupted before daybreak on Friday, after massive amounts of rainfall caused the Guadalupe River to rise by eight metres in less than an hour.
The wall of water overwhelmed cabins, tents and trails along the river’s edge.
Some survivors were found clinging to trees.
Some of the campers had to swim out of their cabin windows to get to safety, while others clung to rope to make it to higher ground.
The date for Sean “Diddy” Combs’s sentencing hearing has been confirmed.
Following his high-profile trial, the hip-hop mogul was found guilty of two counts of transportation for prostitution by jurors in Manhattan, New York, last week – but was cleared of sex-trafficking and racketeering conspiracy.
Defence lawyers argued Combs, who has been in prison in Brooklyn since his arrest in September last year, should be bailed ahead of sentencing given the not guilty verdicts for the more serious charges, but Judge Arun Subramanian denied this – citing, among other things, the rapper’s own admissions of previous violent behaviour.
Sean ‘Diddy’ Combs in court after the verdict was delivered. Pic: Reuters/ Jane Rosenberg
The charges of sex-trafficking and racketeering conspiracy carried a potential life sentence. Combs still faces up to 20 years in prison for the prostitution-related offences, but is not expected to receive the maximum punishment.
After the verdict was delivered, the judge scheduled the sentencing hearing for 3 October. At a remote follow-up conference on Tuesday, with agreement from the defence and prosecution, the judge approved the date.
Combs joined the call but did not make any comment.
Any sentence will include credit for time already served – which will be just over a year by the time the hearing takes place.
During his trial, Combs was accused by prosecutors of abusing and coercing three alleged victims, including his former long-term partner, singer and model Cassie Ventura.
Jurors found the allegations did not amount to sex-trafficking or racketeering, or running a criminal enterprise – but they did find him guilty of transporting Cassie and another former girlfriend “Jane” for prostitution offences around the US, and paying male escorts to engage in sexual encounters.
Despite the guilty verdict on those charges, the 55-year-old’s team described it as “the victory of all victories”.
Read more:
How the trial unfolded
The rise and fall of Sean ‘Diddy’ Combs
In an interview over the weekend, defence lawyer Marc Agnifilo said Combs had received a standing ovation from fellow inmates when he returned to jail after being acquitted of the more serious charges.
“They all said, ‘We never get to see anyone who beats the government’,” he said.
Ahead of sentencing, Combs’s lawyers will file their recommendations by 19 September, with prosecutors likely to follow a week later.
Prosecutors previously said the rapper could face about four to five years in prison under federal sentencing guidelines, while the defence has suggested a two-year sentence.
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