Before a federal judge sentenced FTX founder Sam Bankman-Fried to 25 years in a federal prison for stealing billions of dollars from his cryptocurrency exchange customers Thursday, it became clear that his loyal, steadfast parents, Joseph Bankman and Barbara Fried, were living in a different reality.
As the Stanford law professors stared at the floor in front of them, U.S. District Court Judge Lewis A. Kaplan issued a stinging rebuke of their beloved, first-born child, who was convicted in November in what has been described as “one of the largest financial frauds in history.”
The judge’s assessment of the disgraced, 32-year-old cryptocurrency mogul was at odds with the sympathetic portrait offered by his parents in their pre-sentencing letters. They described him as uniquely “empathetic” from a young age, indifferent to the trappings of wealth and power and only ever motivated by the desire “to do good on a large scale.”
“Sam lived an exemplary life in every way prior to the events that brought FTX down, not merely avoiding doing bad things, but dedicating his life to doing good,” Barbara Fried wrote. “Only 32 years old and with his whole future in front of him, Sam now faces the prospect of spending much of the rest of his life in prison. … There are no words for the grief we feel.”
It’s not known if Bankman and Fried were surprised by the 25-year sentence. It is considerably more than the 6½ years requested by his attorneys but also decades less than the 40 to 50 years sought by prosecutors. Bankman-Fried faced a maximum sentence of 110 years.
But after the sentencing, the parents not surprisingly expressed their profound sadness and disappointment, with CNN reporting that they issued a statement that said: “We are heartbroken and will continue to fight for our son.” The parents in part were echoing the vow of their son’s attorneys to appeal the conviction.
In their letters, the once-popular Stanford professors also described the unique challenges their son has faced in life because he grew up socially awkward, living with “mannerisms” associated with autism spectrum disorder and dealing with mental health issues. Yet, despite these challenges, they said their son possessed a “natural kindness” and could be a “great listener.” At FTX, he only ever cared about doing what was best for his company, they said. “He told us he didn’t care about himself; all he cared about was living long enough to make a significant difference in the world,” Fried said.
Before Kaplan sentenced Bankman-Fried, he agreed that the MIT graduate was “extremely smart,” “talented” and possibly a “high-achieving autistic person.” Kaplan also noted his privileged background, growing up “with loving and devoted parents” on the Stanford University campus with “every advantage they could confer on him.” On one point, Kaplan seemed to agree with Bankman and Fried, saying that their son could been “capable of huge accomplishments.”
But to Kaplan, the idiosyncratic, one-time billionaire also is a “criminal” who did things at FTX he knew were “wrong,” including allowing his trading firm Alameda to use FTX customers’ money to invest in real estate and to donate to preferred political causes and charities.
“Mr. Bankman-Fried knew that Alameda was spending customer funds on risky investments, political contributions and Bahamas real estate,” Kaplan said. “The funds were not his to use.”
Kaplan disputed the idea that Bankman-Fried was motivated by altruism. He said Bankman-Fried wanted power and influence, not only in the burgeoning cryptocurrency industry, but also in politics. He “wanted to be a hugely, hugely politically influential person in this country,” Kaplan said, agreeing with prosecutors that these ambitions propelled his financial crimes.
Before being sentenced, Bankman-Fried, dressed in a loose-fitting brown jail uniform, gave a meandering statement in which he apologized to FTX’s customers, investors and employees, the New York Times and CNN reported. “A lot of people feel really let down, and they were very let down,” he said. “I’m sorry about that. I’m sorry about what happened at every stage.” He added that his decisions “haunt” him every day.
Bankman-Fried’s mother confirmed in her letter that her son was “wracked with remorse” for not preventing the collapse of FTX. “It is, he has told me, the first thing he thinks about when he wakes up and the last thing he thinks about when go goes to sleep, and it occupies many moments in between,” she wrote.
But Kaplan didn’t sound impressed by other things he learned about Bankman-Fried through court filings and during the trial. He found the defendant had attempted to tamper with witnesses, perjured himself and falsely testified about when he learned that FTX had lost $8 billion. The judge remarked on “the brazenness of his actions, his exceptional flexibility with the truth (and) his apparent lack of any remorse.”
Kaplan furthermore rejected a claim made by the defense and by Fried — that the financial losses faced by customers and other creditors would be “compensated in full.” Kaplan said this claim is “is misleading, it is logically flawed, it is speculative.”
For his part, Joseph Bankman acknowledged that his view of his son “is strongly at odds with how the public sees him.” He said, “I could add hundreds of examples of his kindness and deep concern for others, but I’m not sure how much difference they would make.” If nothing else, Bankman and Fried hoped the judge would consider leniency because their son’s possible autism and difficulty in reacting to basic social cues could put him at risk in prison.
“I genuinely fear for Sam’s life in the typical prison environment.” Fried said, while Bankman ended his letter by saying, “Nothing he has done can justify putting him at risk.” He also said, “Once free, he has the potential to benefit others. That’s all he has ever wanted to do.”