Sam Bankman-Fried sentencing: Disgraced FTX founder set to learn prison fate for crypto scam as his parents arrive at court for his hearing

Sam Bankman-Fried's parents have arrived at court as the fraudster is set to face justice over stealing $8 billion from investors.  

Joseph Bankman and Barbara Fried, were spotted arriving at the courthouse for their 32-year-old son's sentencing, set to start at 9:30am.

Joseph Bankman is a lawyer and a longtime tax professor at Stanford Law School. He was employed by FTX to help with tax issues. Barbara Fried is also a lawyer and a professor Emeritus at Stanford Law. 

The parents have been accused of having knowledge of some of the fraudulent activity inside FTX but haven't been charged with any crimes. They were deeded a $16.4 million house in the Bahamas that was almost certainly purchased with FTX customer funds, according to court testimony.

Sam Bankman-Fried is set to learn his ultimate fate today in court. The prosecution wants the disgraced crypto founder to spend 40 to 50 years behind bars, while the defense is asking for a much more lenient sentence of no greater than six and a half years.

Bankman-Fried's parents were a mainstay at the trial in October 2023, which resulted in a conviction on all counts of fraud and conspiracy. 

They were often seen trying to make eye contact and waving to their son throughout the proceedings. While Joseph Bankman was usually more stoic, Barbara Fried was often more up front with her emotions. For particularly difficult moments of the trial, she could be seen with her head in her hands or suppressing tears. 

Bankman-Fried, after being extradited to the US from the Bahamas in December 2022 was placed under house arrest at his parents' home in Palo Alto, California. The home was used as collateral for their son's $250 million bond, which means they'd likely have to forfeit the property if he had fled.

Bankman-Fried didn't flee, but Judge Lewis Kaplan violated his bail agreement in August 2023 when prosecutors accused the crypto founder of leaking personal letters of his ex-girlfriend and Alameda Research CEO Caroline Ellison to the New York Times. This, he ruled, was witness tampering, and Bankman-Fried has been at the Metropolitan Detention Center ever since.

How it started

Bankman-Fried had a charmed upbringing in California. 

In April 2019, after a six-year career in various trading firms, the then 27-year-old founded FTX amid a boom in crypto. 

He told the world he planned to give away his quickly-amassed fortune by the time the bubble burst, and lauded in the global praise of becoming the richest billionaire under 30. 

Venture capitalists lined up to invest in the blossoming platform and SBF, as he has become known, became a poster-boy of the crypto world. 

The company's logo became ubiquitous in pop-culture. 

Then, the 'crypto winter' of 2022 hit, wiping out accounts as the unpredictable and largely unregulated market tumbled. 

Behind the scenes, SBF's parent company, Alameda Research started borrowing to invest in companies in an attempt to keep the market going.  

FTX was fine...until it wasn't

In November 2022, as the walls were closing in, SBF tried to reassure investors. 

Bankman-Fried's November 7 tweet would come back to haunt him countless times during his trial.

'FTX is fine. Assets are fine,' he wrote.

Less than a year later, FTX co-founder Gary Wang would say the exact opposite on the stand.

'FTX did not have enough assets for customer withdrawals,' Wang testified in October 2023. 'FTX did not in fact have enough assets to cover all client holdings…because Alameda had withdrawn a lot of it.'

Alameda is a name you'll hear a lot. Bankman-Fried founded Alameda Research as a crypto trading firm in 2017. Prosecutors argued Alameda was the vehicle for stealing FTX customer deposits.

The first sign of trouble came on November 2, when crypto news site CoinDesk published an Alameda balance sheet.

The balance sheet showed that a substantial portion of Alameda's assets were held in FTT, FTX's proprietary token. According to keen watchers of the crypto industry, this appeared incredibly risky because FTT was essentially a made-up currency by Bankman-Fried, yet it was serving as collateral for many of the hefty loans granted to Alameda for trading purposes. 

Bankman-Fried and Ellison's subsequent attempts to downplay the CoinDesk story proved fruitless because by around November 8, a classic bank run was in full swing. FTX processed billions of dollars worth of panic withdrawals.

As the chaos continued, rival crypto exchange Binance offered to buy out FTX. FTX users rejoiced.

But it wasn't meant to be, because after one look at FTX's books, then-CEO of Binance Changpeng Zhao backed out of the deal on November 9, just one day after announcing the possible buyout.

By November 11, the jig was up. FTX went bankrupt and Bankman-Fried stepped aside as CEO, letting John J. Ray take over the liquidation of the company.

Bankman-Fried's arrest and pre-trial detention

Bahamian authorities didn't arrest Bankman-Fried until December 12, 2022, a month after the FTX implosion. According to many legal professionals, this left him plenty of time to incriminate himself by taking interviews with anyone who would listen.

One his most recognizable interviews was with ABC's George Stephanopoulos, so much so that clips from it were played during the trial. He told Stephanopoulos he didn't know FTX customer funds were being used to pay off Alameda's loan obligations.

About a week after that interview, Bankman-Fried was arrested in the Bahamas. He was detained for a brief time in Fox Hill prison, the only government detention center on the island. Then he was extradited to the US where he was on house arrest at his parents' cushy home in Palo Alto, California.

That lasted until August 11, 2023 when Judge Kaplan ruled that Bankman-Fried violated his $250 million bail by leaking letters from Ellison to the New York Times. Prosecutors accused Bankman-Fried of doing this, and the court deemed the leak to be an attempt from him to intimidate Ellison and paint her in a bad light ahead of her testifying against him.

Since then, Bankman-Fried has been locked up at at the Metropolitan Detention Center in Brooklyn. 

Highlights from the trial   

Bankman-Fried's October trial lasted a month, with the government calling over a dozen witnesses to the defense's three. The most explosive testimony came from other FTX executives, including his ex-girlfriend Caroline Ellison.

The government claimed that billions worth of customer money was funneled out of FTX and into Alameda to pay back the eye-watering loans it had taken out from crypto lenders.

Naturally, as the CEO of Alameda, Ellison arguably had some of the most explosive testimony. 

Ellison testified in October that Alameda took FTX deposits for 'whatever' it needed and that Bankman-Fried 'directed me to commit these crimes.'

Part of what Ellison said Bankman-Fried instructed her to do was to draft seven different balance sheets to send to Genesis, one of Alameda's main lenders, when it recalled its $500 million loan to Alameda.

He and Ellison agreed to send a falsified balance sheet that understated Alameda's liabilities and omitted any mention of it borrowing money from the FTX exchange, aka customers, Ellison testified.

All told, Ellison said Alameda took about $14 billion from FTX customers over the firm's lifetime. 

Pleas for mercy 

Since his arrest and conviction, SBF's attorneys have made repeated pleas for leniency. 

From his veganism to appeals from his parents and mystery friends who wanted to vouch for his bail, the once impermeable crypto-king has dropped contrition and begged for his freedom. 

His fate now lies in the hands of US District Judge Lewis Kaplan, the no-nonsense justice who presided over Donald Trump's E. Jean Carroll case.