Ryan Salame, a top executive at collapsed cryptocurrency exchange FTX, was sentenced to seven and a half years in prison on Tuesday, making him the first of Sam Bankman-Fried's circle of advisors at FTX to receive a prison sentence.
Salame, 30, a trusted lieutenant of Bankman-Fried, the exchange's founder, pleaded guilty last year to violating campaign finance law and a charge of operating a money transfer business without license. He is one of four top deputies in the FTX empire who have pleaded guilty to crimes since the company imploded in November 2022.
Mr. Salame's sentence exceeded the five to seven years recommended by prosecutors. Defense lawyers had asked for 18 months.
Wearing a blue suit and socks emblazoned with the Bitcoin logo, Salame stood before Judge Lewis A. Kaplan as the sentence was read aloud in U.S. District Court in Manhattan. Judge Kaplan called Mr. Salame's crimes “astonishing.”
“The state of our political life in this country is in jeopardy,” he said. “Efforts like the one undertaken by Salame and Bankman-Fried only make things worse.”
Mr. Salame will surrender on August 29. His lawyers asked him to serve his sentence at the federal prison in Cumberland, Maryland, near his home. Mr Bankman-Fried is serving a 25-year sentence after being found guilty of fraud and conspiracy in a trial last year.
Before FTX went bankrupt, Salame was a key figure at the exchange, overseeing its branch in the Bahamas, where the company was based. As FTX grew into a $32 billion business, Salame spent lavishly. He liked expensive cars and private jets and he bought restaurants in the Berkshires of Massachusetts. He has also been a prolific political donor, giving more than $24 million in the 2022 midterm elections, mostly to Republicans.
When FTX imploded, Mr. Salame became a target of federal prosecutors, who searched his home in Maryland. Mr. Bankman-Fried was accused of stealing $8 billion from FTX clients and using the money to finance political contributions, venture investments and luxury real estate purchases. Three top FTX executives – Gary Wang, Nishad Singh and Caroline Ellison – pleaded guilty to financial crimes and agreed to cooperate with the government. Everyone awaits the sentence.
In September, Salame also pleaded guilty, admitting that he acted as an illegal “straw donor” who made political contributions at Bankman-Fried's direction to evade federal disclosure requirements. In a sentencing memo, prosecutors called it “one of the largest campaign finance crimes ever” in American history.
As part of the plea deal, Mr. Salame agreed to pay a $6 million fine and more than $5 million in restitution, and to forfeit two properties in Massachusetts, as well as his Porsche.
In the memo, prosecutors argued that Mr. Salame had been motivated by a desire for money and influence. Even as FTX collapsed, he withdrew $5 million from the exchange, using the funds to pay off personal expenses and hire a public relations firm. Hours before the bankruptcy, prosecutors wrote, Mr Salame had withdrawn another $600,000 from his account on FTX's US platform.
Judge Kaplan invoked those withdrawals during Tuesday's hearing. “It was me first: I'll get in the lifeboat first,” he said of Mr. Salame. “To hell with all those customers.”
In their memo to Judge Kaplan, Mr. Salame's defense lawyers said he was unaware that Mr. Bankman-Fried was stealing billions of dollars from clients. That news “was as shocking and disconcerting to Ryan Salame as to anyone else in the world,” the lawyers wrote.
They said Mr Salame's life had been “decimated” and that FTX's disappearance had brought “shame and instability” to his family. Mr. Salame is in a long-term relationship with Michelle Bond, a former cryptocurrency industry lobbyist who also supported Mr. Bankman-Fried. In November, Ms Bond gave birth to the couple's first child, the statement said. Mr. Salame has also begun dealing with a substance abuse problem, his lawyers wrote, and plans to attend law school.
Addressing the court on Tuesday, Jason Linder, a lawyer for Mr. Salame, described his client as “simply a tool” of Mr. Bankman-Fried. Unlike Mr Wang, Mr Singh and Ms Ellison, Mr Salame did not testify against Mr Bankman-Fried in court last year. But his lawyers said he had voluntarily produced documents and “offered assistance and cooperation” to the government as it prepared for trial.
At Tuesday's hearing, Mr. Linder pointed to rows full of friends and family who had accompanied Mr. Salame, including Ms. Bond, Mr. Salame's mother and aunt.
Before the sentence was announced, Mr Salame briefly addressed the court, apologizing to FTX customers and his family. “Mom, I can't imagine how you feel,” he said, his voice cracking.
But Judge Kaplan said a long sentence was needed to send a message to wealthy people about the “consequences of the perversion of our electoral system and its rules.”
Salame “knowingly and willfully contributed to destroying the limited transparency that U.S. laws provide in this area,” he said.