DProsecutors have called for a prison sentence of between 40 and 50 years against crypto entrepreneur Sam Bankman-Fried, who was found guilty of fraud. A harsh sentence is “necessary” to reflect the “seriousness” of the crimes committed by the founder of failed cryptocurrency platform FTX, New York federal prosecutors said in a court document last Friday.
The sentence against the 32-year-old American, who was once celebrated as a crypto prodigy, will be announced on March 28th. According to media reports, his defense lawyers have argued for Bankman-Fried to be sentenced to around six years in prison.
Billions embezzled
The fallen crypto entrepreneur was found guilty last November on seven counts, including fraud and money laundering. He was accused of embezzling billions of dollars in customer funds.
The then world's second largest crypto exchange FTX went bankrupt in November 2022, triggering an earthquake in the crypto world. Bankman-Fried had previously embodied the rise of cryptocurrencies into a supposedly serious investment like no other.
However, the business construct collapsed when it was revealed that FTX was partially using customer funds to support the crypto investment fund Alameda Research, also founded by Bankman-Fried. He made risky trades and borrowed funds from FTX. Actually, collateral should have been deposited for such transactions. There were also computer systems that were supposed to take care of this. But this software made a secret exception for Alameda. This allowed the hedge fund to go as deep as it wanted on FTX.
Amid a fundamental crisis in digital currencies, panicked investors withdrew their funds, leading to FTX's bankruptcy. In the end, around 8.7 billion dollars (8 billion euros) were missing.
Who is Bankman Fried?
Sam Bankman-Fried was born in California in 1992. He is the son of a professor; his parents teach at Stanford University. In 2019 he founded FTX, an exchange for cryptocurrency derivatives, among other things, in Hong Kong. In 2021 he moved to the Bahamas, where he lived in a shared apartment – in a penthouse. With his lifestyle, Bankman-Fried imitated a modest man who, despite making billions, drove a Toyota Corolla and didn't care about clothes. The fascinated public was able to admire him in shorts and a baggy sweatshirt in a discussion with Bill Clinton and Tony Blair. In December 2022, charges of financial fraud were brought against him.
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