By: Weston Tregay
Sam Bankman-Fried’s Crimes Do not Reflect His Sentence
In 2019, Sam Bankman-Fried founded FTX (Futures Exchange) Trading Ltd.— the third largest cryptocurrency exchange in the world. Yet, in a few months, the $32 billion exchange would be bankrupt and its founder in jail. Sam Bankman Fried has cheated thousands of investors out of billions of dollars, but his sentence of a meager 25 years doesn’t reflect the true harm that Bankman-Fried’s actions had on society.
To understand this disastrous fall of FTX and Sam Bankman-Fried, it all started with Sam Bankman-Fried’s small company called Alameda Research, a crypto trading firm, where FTX would attract customers to its exchange as a market maker. The firm often took the losing side of trades to keep consumers invested in the exchange. When FTX launched and found its way to the top of crypto companies, some of its profits were diverted to support the struggling Alameda research. If not for FTX funding, Alameda would have been bankrupt a while back. While the scheme was initially successful, it did not take a long time for SEC officials and other federal officers to realize what FTX was doing. Sam Bankman-Fried was skimming money off this Alameda research and taking it for himself. When his trial came, several members of his inner circle, including his ex-girlfriend who was an executive at Alameda, testified against him.
The jury concluded that Sam Bankman-Fried was guilty of all seven charges of fraud, and he was sentenced to 25 years in prison, many of which he might not even have to serve because of his intentions to aid those harmed by his money siphoning. Yet, this quarter of a century sentence still feels insubstantial for the sheer impact of his crimes. In three years, Bankman-Fried funneled up to $14 billion of investor money into his own pockets. He played investors, users, and even his tightest circle to feed his greed. US Attorney Damian Williams stated that “Sam Bankman-Fried perpetrated one of the biggest financial frauds in American history” so why is it not sentenced like one? In 2009, Bernard Madoff was convicted for orchestrating the largest Ponzi scheme in the world and stealing billions of dollars from investors. The difference between Madoff’s and Bankman-Fried’s crimes lies in the sentence given: courts punished Madoff with a six times longer sentence. Therefore, it is imperative for the US judicial system to implement some consistency in the sentences they give to emphasize the importance of financial integrity in company practices. The ones taking the brunt of these unfair situations are generally those in worse financial and political situations. This sentence to the once poster boy of crypto is a prime example of the leniency of our judicial system towards white-collar criminals, as a man who just robbed billions of dollars will be walking free by 2050.
