First he played LoL, then with his customers’ money, now he has to go to prison for 25 years

Sam Bankman-Fried (SBF), co-founder of failed crypto exchange FTX, has been sentenced to 25 years in prison after defrauding customers and investors of his bankrupt company.

Who is the person you are talking about? Sam Bankman-Fried, once celebrated as one of the leading lights in the world of cryptocurrencies, has now been sentenced to 25 years in prison by a New York court for fraud (BBC). The founder of the cryptocurrency platform FTX was accused of embezzling billions of dollars in customer funds.

The accusation and the conviction

What’s behind it? The cause of FTX’s decline was revealed in a scandal surrounding the embezzlement of customer funds. The FTX platform collapsed in late 2022 and he was later arrested in the Bahamas and extradited to the US.

Sam Bankman-Fried was found guilty by a jury on all seven counts back in November 2023. Judge Lewis Kaplan now imposed a prison sentence of 25 years. The public prosecutor’s office accused him of unsurpassed greed, which led to one of the biggest financial scandals of our time.

The indictment accused him of running a systematic fraud scheme since FTX was founded. He siphoned off billions from customers and used them for personal purposes, including investments in other companies, donations to politicians and the purchase of expensive real estate.

How it all began

Its story begins with the founding of FTX in 2019, a cryptocurrency platform that quickly gained popularity and became one of the largest trading venues for digital assets such as Bitcoin.

Through sponsorship, Sam Bankman-Fried managed to make his company known to a wider public:

  • Among other things, FTX secured the naming rights to an NBA basketball stadium in Miami
  • Was a sponsor of Mercedes in Formula 1
  • Also became a name sponsor for the LoL team TSM
  • He played a lot of League of Legends himself. He was once banned by a court from playing LoL; more precisely, he was only allowed to use his PC for certain activities and only for certain websites.

    Bankman-Fried, who was considered a visionary genius, led the company to immense success and became a multi-billionaire himself. But the success story collapsed when FTX collapsed in 2022 and investors lost billions.

    Bankman-Fried had a hedge fund called Alameda Research that made risky trades and borrowed money from FTX without posting adequate collateral. This meant that the hedge fund could be in the red on FTX as much as it wanted. However, Alameda’s business went wrong, and as a result, a billion-dollar hole appeared in the FTX coffers.

    According to Tagesschau, Bankman-Fried claimed in court that he only partially understood the financial situation of his companies and that he had made mistakes. He wants to appeal the verdict and sentence.

    Prosecutors argued that given the scale of the crime, a sentence of 40 to 50 years was appropriate to demand respect for the law.

    The defense, on the other hand, argued for a much lighter sentence of five to six and a half years in prison. They emphasized that many FTX customers received a large part of their money back. He is not the supervillain he was portrayed as.

    However, the judge rejected that argument, comparing Bankman-Fried to a thief who used stolen money to bet in Las Vegas and therefore did not deserve a reduction in his sentence.