Sam Bankman-Fried’s sentence is a warning to crypto 

THE sentencing of cryptocurrency wunderkind turned convicted fraudster Sam Bankman-Fried to 25 years in jail along with the forfeiture of more than US$11 billion looks like a fair outcome. While not as harsh as the request from prosecutors for as much as 50 years, it should stand as a clear deterrent for aspiring fraudsters both in traditional finance and its decentralised offshoots. And given crypto is still in the midst of a much-needed clean-up, that matters.

To recap, the 32-year-old Bankman-Fried was convicted of fraud, conspiracy and several other offences last year after the spectacular collapse of his crypto exchange FTX revealed an US$8 billion hole of missing customer funds under his watch. The jury wasn’t swayed by the one-time billionaire’s defence that he’d fallen victim to a market downturn, largely because the evidence was so overwhelming and his defence so contradictory. His former lieutenants’ testimony was as damning as his own lack of remorse and history of statements such as: “F**k regulators”.

The hope of Bankman-Fried’s lawyers was that some mitigating factors might help tilt the balance in favour of a sentence of just 6.5 years in jail (more like Martin Shkreli than Bernie Madoff). One was his relatively young age and character, portrayed as a “beautiful puzzle” – a smart, well-meaning outcast held back by mental health issues and whose real goal was not self-enrichment but philanthropy. Another was the optimism that the FTX bankruptcy process might repay customers in full, aided by a rebound in crypto prices and the firm’s stake in assets such as artificial intelligence startup Anthropic.