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Friday, June 14, 2024

FTX Executive Who Turned on Sam Bankman-Fried Sentenced to 7.5 Years in Prison

Ryan Salame, a former high-ranking executive of FTX, has become the first member of Sam Bankman-Fried’s team to receive a prison sentence following the cryptocurrency exchange’s bankruptcy in November 2022.

Salame, who once served as a key aide to FTX founder Sam Bankman-Fried, has been sentenced to 90 months, equivalent to seven and a half years, in prison. This will be followed by three years of supervised release. Additionally, Salame has been ordered to pay over $6 million in forfeiture and more than $5 million in restitution.

The sentence exceeds the prosecution’s recommendation of five to seven years and is significantly harsher than the 18-month sentence proposed by Salame’s defense team.

In September, Salame pleaded guilty to charges of conspiracy to make unlawful political contributions, defrauding the Federal Election Commission, and conspiracy to operate an unlicensed money-transmitting business.

Judge Lewis Kaplan, who had previously sentenced Sam Bankman-Fried to 25 years in prison in March, presided over Salame’s case as well.

In 2021, Salame moved from a senior position at Bankman-Fried’s crypto hedge fund, Alameda Research, to become co-CEO of FTX’s Bahamian subsidiary, FTX Digital Markets. During his time there, he spent millions on real estate and political donations.

Bahamian lawyers estimate that Bankman-Fried and Salame spent $256.3 million on acquiring and maintaining 35 properties across New Providence, real estate that Bahamian regulators have sought to recover during FTX’s U.S. bankruptcy proceedings. Furthermore, Federal Election Commission records show that Salame donated over $24 million to Republican candidates and causes during the 2022 election cycle.

In the days leading up to FTX’s bankruptcy in 2022, Salame alerted Bahamian authorities to potential fraudulent activities by Bankman-Fried, specifically the transfer of customer funds from FTX to Alameda Research. This disclosure, which indicated “possible mishandling of clients’ assets,” marked one of the first instances of an insider turning against Bankman-Fried, who was later found guilty of misappropriating over $8 billion of customer funds that were presumed safe in the exchange.

Following this, other insiders, including Alameda’s former CEO and Bankman-Fried’s ex-girlfriend Caroline Ellison, FTX co-founder Gary Wang, and FTX’s former head of engineering Nishad Singh, also testified against Bankman-Fried, contributing to his guilty verdict in November. Notably, Salame did not testify during Bankman-Fried’s trial.

U.S. Attorney Damian Williams emphasized the gravity of Salame’s offenses, stating that the sentence highlighted “the substantial consequences for such offenses.” Williams further noted, “Salame’s involvement in two serious federal crimes undermined public trust in American elections and the integrity of the financial system.”

This sentence marks the first among Bankman-Fried’s executive team since FTX declared bankruptcy in November 2022.


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