Former FTX Executive Deserves 5 to 7 Years in Jail, US Says

Ava Benny-Morrison and Robert Burnson
·3 min read
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(Bloomberg) -- Former FTX executive Ryan Salame should serve five to seven years in prison, prosecutors say, for criminal charges stemming from the multibillion-dollar collapse of the cryptocurrency empire.

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In a sentencing memo filed in federal court in Manhattan on Tuesday, federal prosecutors said the 30-year-old pleaded guilty to “serious crimes, and a substantial sentence is required to ensure that Salame receives just punishment.” Salame’s lawyers have argued he should serve no more than 18 months.

“The campaign finance offense is one of the largest-ever in American history, and the unlicensed money transmitting business exchanged more than $1 billion without proper supervision,” prosecutors wrote.

Salame is due to be sentenced on May 28, the first of FTX co-founder Sam Bankman-Fried’s top lieutenants to be punished for their roles at a crypto exchange that siphoned $10 billion from customers, investors and lenders. Bankman-Fried was sentenced in March to 25 years in prison, an outcome he is planning to appeal.

Members of Bankman-Fried’s inner circle who turned against him — Caroline Ellison, Nishad Singh and Gary Wang — are yet to be sentenced.

Salame joined FTX’s sister hedge fund Alameda Research in 2019, after meeting Bankman-Fried at a blockchain conference.

The former accountant moved to the Bahamas in 2021 and became chief executive officer of FTX’s subsidiary there. Prosecutors say Salame allowed FTX to accept customer deposits through a US bank account when it didn’t have a proper license to operate. He also acted as a straw donor for Bankman-Fried, making millions in political donations to candidates and campaigns he perceived as crypto-friendly in the lead-up to the 2022 election.

In advocating a sentence of no more than 18 months in prison, Salame’s attorneys pointed out he was the first FTX figure to alert authorities in the Bahamas about potential fraud in late 2022.

Since pleading guilty in September, Salame has started a new chapter in his life, raising his first child with longtime partner Michelle Bond and seeking treatment for substance abuse.

“He has been a good man who has done much good in this world, who conspired to commit two crimes while in the thrall of a criminal leader who had beguiled captains of industry and politics far savvier than Ryan,” his attorneys wrote in a court filing.

Salame’s push for 18 months or less is well below the recommendation of 10 years prison made by US probation officials.

As part of his plea deal, Salame agreed to forfeit $6 million of assets to the US government, including a restaurant near his hometown in Massachusetts. Salame’s sentencing memo included 28 letters from friends and family, including former Alameda Research co-CEO Sam Trabucco. Trabucco has managed to keep a low profile since FTX’s blowup, even in the face of a high-profile trial that zeroed in on the actions of his colleagues.

Prosecutors said in their memo that a “substantial sentence” was required for deterrence.

“Would-be violators of the campaign finance laws must understand that these are not minor offenses,” they wrote. “And players in the crypto industry, who are serial offenders of the money transmission laws, must understand that they disregard the registration requirements at their peril.”

The case is US v. Bankman-Fried, 22-cr-673, US District Court, Southern District of New York (Manhattan).

(Updates with excerpt of prosecutors’ sentencing memo at bottom.)

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