Cryptocurrency king sentenced to 25 years in prison for fraud in US | Economy

Businessman Sam Bankman Fried He was sentenced to 25 years in prison To allocate US$8 billion (R$40 billion) from FTX clients – The cryptocurrency brokerage, which is worth about 32 billion US dollars and was one of the largest companies in the world before its bankruptcy at the end of last year.

“He knew he was wrong,” Judge Lewis Kaplan said before announcing the sentence. He added, “He knew that he was a criminal (…) but he would not confess to anything, as this is his right.”

Bankman-Fried will appeal the conviction and sentence. The prosecution had demanded imprisonment for a period ranging between 40 and 50 years for the businessman’s crimes.

This was one of the largest financial frauds ever recorded. The ruling came just over a year after FTX filed a request for judicial recovery, in a rapid collapse of the company that shocked the financial markets and melted his personal wealth estimated at 26 billion US dollars (130 billion Brazilian reals).

The ruling marks the downfall of Bankman Fried from the “king of cryptocurrencies” and an important political donor to the target of a massive operation being conducted by US authorities investigating fraud in cryptocurrency markets. .

The former billionaire was extradited from the Bahamas in December 2022, when he was arrested and released on bail shortly afterwards. He was arrested again in August 2023, on charges of attempting to tamper with witnesses in the case.

What happened to FTX?

FTX's problems began when the media began reporting that in order to bail out Alameda Research, a venture fund also set up by Bankman-Fried, the CEO had loaned money from FTX itself to the company.

The information indicates that he used client money deposited with the brokerage firm to finance the Alameda operation, which is illegal – because even though they are owned by the same owner, the companies' business must be conducted separately.

This news came to light at the beginning of November 2022, along with Alameda's balance sheet. The document revealed the existence of about $14.6 billion USD in the form of FTT (FTX token, a type of official currency on the platform).

As a result, the broker's clients began scrambling to withdraw their deposits, for fear of losing their resources.

Because it did not have enough dollars to cover all the withdrawals, FTX went bankrupt and filed for recovery in the US courts on November 11, 2022. The company went bankrupt and caused Bankman-Fried to lose everything.