Bloomberg reported that federal prosecutors have recommended a five- to seven-year prison sentence for former FTX executive Ryan Salame, emphasizing his significant role in the exchange’s collapse.
The downfall of one of the largest US crypto exchanges in November 2022 continues to impact the industry.
Former FTX Executive’s Crimes and Legal Battles
Salame pleaded guilty last September and is scheduled for sentencing on May 28. His charges include campaign finance violations and operating an unlicensed money-transmitting business. Prosecutors argue a substantial sentence is necessary for justice and deterrence. In their memo, they highlight Salame’s offenses.
“The campaign finance offense is one of the largest ever in American history. The unlicensed money-transmitting business exchanged more than $1 billion without proper supervision,” prosecutors stated.
Salame’s legal team advocates for a lighter sentence of no more than 18 months. They argue he was not the mastermind and lost much of his fortune with the FTX collapse. His lawyers highlight his cooperation with authorities, including alerting the Bahamas about potential fraud.
Read more: FTX Collapse Explained: How Sam Bankman-Fried’s Empire Fell
Salame joined Alameda Research, FTX’s sister hedge fund, in 2019 after meeting co-founder Sam Bankman-Fried. By 2021, he moved to the Bahamas and became CEO of FTX’s subsidiary there. In addition to the unlicensed money-transmitting charges, they accuse him of acting as a straw donor for Bankman-Fried, channeling millions in political donations.
Former FTX executive agreed to forfeit nearly $6 million in assets, including a restaurant in Massachusetts, as part of his plea deal. The sentencing memo includes 28 letters from friends and family attesting to his character and highlighting his charitable contributions.
Some prominent figures have pointed out the controversial nature of the court’s decision. Cal Evans, founder of Fortune Wallet and an industry veteran, discussed Salame’s case with BeInCrypto, sparking a critical debate about fairness and consistency in financial regulation.
“We have to juxtapose this situation to the crisis of 2008, where whole banks collapsed and no banking “professionals” went to jail. It would be telling if both SBF and Salame are given hard jail time when nobody faced any consequences in the banking industry for equally if not worse banking practices. FTX attempted to be as regulated as possible. However as is typical with the US regulatory frameworks at the moment, there is no “clear” way that a company can be clean with their business activities. This, twinned with how Salame is being treated, is telling that the US has no intention on taking crypto seriously”, he said.
Salame’s case marks the beginning of sentencing for key figures in the FTX scandal. Other prominent individuals like Caroline Ellison, Nishad Singh, and Gary Wang, await judgment. The November 2022 scandal revealed massive embezzlement and misappropriation of customer funds totaling $10 billion.
In March, Sam Bankman-Fried was sentenced to 25 years for fraud. He is currently appealing the verdict.
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