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.
Donald Trump has filed a lawsuit against Rupert Murdoch, two Wall Street Journal reporters and the publication’s owner, News Corp.
The US president has accused the named individuals of defamation, claiming they acted with malicious intent and caused him overwhelming financial and reputational harm.
The lawsuit, which was filed in Miami, seeks at least $10bn (£7.5bn) in damages.
In a post on Truth Social, Mr Trump called the lawsuit “historic legal action” which was filed on behalf of himself and all Americans who he said will “no longer tolerate the abusive wrongdoings of the Fake News Media”.
“I hope Rupert and his ‘friends’ are looking forward to the many hours of depositions and testimonies they will have to provide in this case,” he wrote.
It comes after Mr Trump claimed that a letter he allegedly wrote to paedophile Jeffrey Epstein was “fake” and said he would sue the “ass off” Rupert Murdoch, who owns the Wall Street Journal (WSJ), which first published the story.
The publication had said Mr Trump wrote the letter as part of a collection Epstein’s former girlfriend, Ghislaine Maxwell, planned to give him as a 50th birthday present in 2003.
It claimed the message, allegedly from Mr Trump, featured several lines of typewritten text, concluding with: “May every day be another wonderful secret.”
The text was framed by what appeared to be a hand-drawn outline of a naked woman, the WSJ claimed. The letter is also said to have featured the signature “Donald”.
Mr Trump immediately denied writing the letter when the WSJ report was published on Thursday night.
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Memes of Epstein undermine victims, says lawyer
“The Wall Street Journal printed a FAKE letter, supposedly to Epstein,” he wrote on Truth Social.
“These are not my words, not the way I talk. Also, I don’t draw pictures. I told Rupert Murdoch it was a Scam, that he shouldn’t print this Fake Story. But he did, and now I’m going to sue his ass off, and that of his third rate newspaper.”
Mr Trump ignored questions about Epstein as he signed a cryptocurrency bill at the White House earlier on Friday.
The president’s lawsuit comes as the US government filed a motion to unseal grand jury transcripts related to Epstein, who took his own life while awaiting trial in 2019.
In a Manhattan federal court filing, the Department of Justice said the criminal cases against Epstein and Maxwell are a matter of public interest, justifying the release of associated grand jury transcripts.
Earlier on Friday, Mr Trump said attorney general Pam Bondi had been asked to release the transcripts because of “the ridiculous amount of publicity given to Jeffrey Epstein”.
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The justice department previously said it had around 200 documents relating to Epstein and that the FBI had thousands more.
It is unknown how much of this is grand jury testimony, which is typically kept secret under US law.
Read more:
All we know about the ‘friendship’
Trump denies writing birthday letter to Epstein
The president has faced increased scrutiny over his alleged friendship with Epstein since his administration’s U-turn on the so-called ‘Epstein files’.
Mr Trump pledged to release files on Epstein during his presidential campaign, as his MAGA movement accused the Biden administration of suppressing the extent of Epstein’s paedophilia, predatory behaviour and his so-called “client list” – thought to contain names of the rich and famous who conspired with him in his child sex trafficking operation.
But after a review of the evidence the US government has, the Justice Department recently determined that no “further disclosure would be appropriate or warranted”.
Venezuela releases jailed Americans in prisoner swap
The Trump administration said on Friday that it had negotiated an exchange with Venezuela, resulting in the release of 10 jailed Americans.
US secretary of state Marco Rubio said the prisoners, who had been held in the South American country, were “on their way to freedom”.
Men in the CECOT jail in EL Salvador. Pic: Reuters
In return, 252 Venezuelan migrants being held in El Salvador have been freed, the Venezuelan government said.
They had been held in the notorious maximum security CECOT prison after being deported by the US.
US
Trump denies claim he wrote birthday letter to Jeffrey Epstein – and says he has ordered release of more case files
Donald Trump has called an alleged letter he wrote to paedophile Jeffrey Epstein “fake” and said he will sue the “ass off” Rupert Murdoch, who owns the paper that first published the claim.
In multiple posts on Truth Social, the US president accused The Wall Street Journal (WSJ) of fabricating the letter that it claimed was written by Mr Trump as part of a collection of letters addressed to Epstein that his former girlfriend Ghislaine Maxwell planned to give him as a birthday present in 2003.
According to documents seen by the WSJ, Mr Trump’s letter featured several lines of typewritten text framed by what appeared to be a hand-drawn outline of a naked woman.
The paper said the letter concludes “Happy Birthday – and may every day be another wonderful secret”, and featured the signature “Donald”, allegedly drawn across the woman’s waist, meant to mimic the appearance of pubic hair.
Epstein took his own life in prison in 2019. Pic: AP
Responding to the WSJ’s claims, Mr Trump wrote: “The Wall Street Journal printed a FAKE letter, supposedly to Epstein. These are not my words, not the way I talk. Also, I don’t draw pictures.
“I told Rupert Murdoch it was a Scam, that he shouldn’t print this Fake Story. But he did, and now I’m going to sue his ass off, and that of his third rate newspaper. Thank you for your attention to this matter! DJT.”
He said earlier he would also sue the WSJ and News Corp, which Mr Murdoch owns. The WSJ is published by News Corp subsidiary company, Dow Jones & Co.
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From 16 July: Trump: Epstein case is ‘a boring story’
The Justice Department has not responded to the WSJ and the FBI declined to comment.
In a separate post, Mr Trump said he has asked the attorney general, Pam Bondi, to release “any and all pertinent grand jury testimony” in the case of the paedophile financier who was found dead in his Manhattan cell in August 2019, shortly after he was arrested on sex trafficking charges.
The release of any documents, Mr Trump said, would be subject to approval by a court.
The justice department has previously said it had around 200 documents relating to Epstein and that the FBI had thousands more. It is unknown how much of this is grand jury testimony – which is typically kept secret under US law.
Ms Bondi responded to the president on X, writing: “President Trump-we are ready to move the court tomorrow to unseal the grand jury transcripts.”
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Elon Musk, who claimed last month that Mr Trump appears in the Epstein files, was surprisingly among the first to come to the president’s defence over the WSJ claims.
“It really doesn’t sound like something Trump would say tbh,” the tech billionaire wrote on X, before going on to ask where the evidence against Epstein allegedly held by the FBI had gone.
The Trump administration has come under criticism after the president appeared to U-turn on his own promise to release more information about the Epstein case publicly.
In the run-up to the US election last year, Mr Trump drew on rumours and conspiracy theories that appeared to accuse the Biden administration of suppressing the extent of Epstein’s paedophilia, predatory behaviour and his so-called “client list” – thought to contain names of the rich and famous who conspired with him in a child sex trafficking operation.
Ms Bondi fuelled these rumours in February by telling Fox News that the alleged Epstein client list was “sitting on my desk right now to review”.
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In the same month, the justice department released some government documents regarding the case, but there were no new revelations.
After a months-long review of additional evidence, the department earlier this month released a video meant to prove that Epstein killed himself, but said no other files related to the case would be made public.
The decision was criticised by many in Mr Trump’s Make America Great Again (MAGA) movement, who Mr Trump later called “weaklings”.
Sky News has contacted the White House for further comment.
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