FTX founder Sam Bankman-Fried’s former senior lieutenant, Ryan Salame, has been sentenced to seven and a half years in prison for 90 months, with three years of supervised release.
TakeAway Points:
- FTX founder Sam Bankman-Fried’s former senior lieutenant, Ryan Salame, has been sentenced to seven and a half years in prison for 90 months, with three years of supervised release.
- In addition, Salame has been mandated to surrender more than $6 million and pay more than $5 million in restitution.
- In comparison to the five to seven years that the prosecution had recommended and the eighteen months that Salame’s defence team had asked for, the punishment is harsher.
Senior Lieutenant Ryan Salame’s Sentence
Salame has additionally been mandated to forfeit more than $6 million and make restitution totaling more than $5 million.
The sentence is far harsher than the five to seven years that the prosecution had recommended and far longer than the 18 months that Salame’s defence team had asked for.
Salame entered a guilty plea in September to charges of conspiring to transgress political donation laws, defrauding the Federal Election Commission, and running an unauthorised money-transmitting enterprise.
Judge Lewis Kaplan sentenced Sam Bankman-Fried to 25 years in prison in March.
Ryan Salame’s Implicating Activities
Salame moved from a senior position at Bankman-Fried’s cryptocurrency hedge fund, Alameda Research, to co-CEO of FTX Digital Markets, the company’s Bahamian subsidiary, in 2021. During his term, Salame spent millions on real estate and political contributions.
According to one estimate from Bahamian solicitors, Bankman-Fried and Salame paid $256.3 million to purchase and manage 35 properties in New Providence; these are holdings that Bahamian regulators sought to reclaim during FTX’s bankruptcy proceedings in the United States. In the meantime, Salame contributed over $24 million to Republican candidates and groups during the 2022 election season, according to records from the Federal Election Commission.
Salame informed Bahamian authorities that Bankman-Fried might have committed fraud by transferring customer funds from the cryptocurrency exchange to his other company, Alameda Research, a few days before FTX declared bankruptcy in 2022. Salame revealed Bankman-Fried’s “potential mismanagement of clients’ assets,” per a criminal complaint.
This marked one of the initial public admissions of an insider betraying Bankman-Fried, who was convicted of swindling over $8 billion in customer funds that they thought were securely kept on the exchange.
Testimonies Against Ryan Salame
But since then, a number of other insiders have testified for the prosecution, which ultimately led to his guilty verdict in November. These insiders include FTX co-founder Gary Wang, former FTX engineer Nishad Singh, and Caroline Ellison, the former CEO of Alameda and ex-girlfriend of SBF. Salame did not testify in court during Bankman-Fried’s prosecution.
U.S. attorney Damian Williams said in a statement that Tuesday’s punishment highlighted “the serious repercussions for such offences.”
“Salame’s involvement in two serious federal crimes undermined public trust in American elections and the integrity of the financial system,” Williams added.
The punishment made clear that the judge considered the FTX scam, including the multi-million dollar campaign fundraising scheme in which Salame was intimately involved, to be exceedingly serious, according to former state and federal prosecutor Mark Bini, who spoke with CNBC.
“While Salame’s counsel sought to argue that his production of documents to the Government showed his cooperation and contrition, it’s clear that Judge Kaplan did not view it that way,” said Bini.
Salame is the first member of the SBF executive team to receive a sentence following the exchange’s November 2022 bankruptcy filing.
