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Former FTX executive Ryan Salame has been sentenced to 90 months in prison for his role in the criminality that led to the downfall of the once mighty digital asset exchange.
On Tuesday, U.S. District Judge Lewis Kaplan passed final judgment on Salame, the former co-CEO of FTX Digital Markets. Salame pleaded guilty last September to conspiracy to make unlawful political campaign contributions and defraud the Federal Election Commission (FEC), as well as conspiracy to operate an unlicensed money-transmitting business.
The 7.5-year sentence Kaplan imposed was higher than the five-to-seven years prosecutors had recommended in their pre-sentencing memo and far longer than the 18-month maximum that Salame’s attorneys argued he should serve. But Kaplan clearly wasn’t in a giving mood, adding three years of post-prison supervised release and ordering Salame to forfeit more than $6 million and pay another $5 million in restitution.
Kaplan scolded Salame in court, saying there was plenty of evidence indicating that he “knew precisely what he was doing” when he used FTX customer funds to make political contributions.
While FTX founder Sam Bankman-Fried (SBF) largely fed cash to Democratic pols and liberal causes, Salame was responsible for steering millions to Republicans. All told, FTX executives made more than 300 individual contributions totaling tens of millions of dollars, much of it looted from FTX customers.
Damian Williams, U.S. Attorney for the Southern District of New York, said Salame “agreed to advance the interests of FTX, Alameda Research, and his co-conspirators through an unlawful political influence campaign and through an unlicensed money transmitting business, which helped FTX grow faster and larger by operating outside of the law… Today’s sentence underscores the substantial consequences for such offenses.”
FTX filed for bankruptcy in November 2022, mere days after a leaked balance sheet from its affiliated market-maker Alameda Research showed the company was effectively insolvent. This fiscal hole—which measured in the billions—came courtesy of SBF & Co. dipping into FTX customer deposits to cover shortfalls resulting from profligate spending and the fact that Alameda’s brain trust were really, really bad at trading.
While Salame’s attorneys tried to minimize his involvement in FTX’s fiscal hijinks, Kaplan pointed out that Salame withdrew $5 million from FTX as the exchange was circling the drain. Kaplan noted that Salame “tried to withdraw tens of millions more. It was ‘me first.’ I’m getting in the lifeboat first. To heck with all those customers.”
While Salame pleaded for leniency based on his having provided documents that he claimed aided prosecutors in securing SBF’s 25-year prison sentence earlier this spring, he never reached a formal cooperation deal and didn’t testify against SBF.
Other FTX/Alameda alumni, like former Alameda CEO Caroline Ellison and FTX’s former head of engineering Nishad Singh, both reached cooperation deals and testified against SBF, which will likely leave them looking at far more lenient treatment when it’s their turn in Kaplan’s court later this year.
Three-dimensional villain speaks!
In a pre-sentencing plea for leniency, Salame’s attorneys submitted a list of personal testimonials about Salame’s alleged good character and the fact that he’s very,very sorry for what he did. Among the more unlikely authors of these letters was none other than Sam Trabucco, the former Alameda co-CEO who flew the coop a few months before FTX’s bankruptcy and hasn’t been heard from since.
Trabucco, who curiously has yet to be charged for his role in the FTX/Alameda collapse, claimed Salame was “a complex person who made mistakes, not some one-dimensional villain.” Trabucco said Salame was “prepared to accept the consequences” of his actions but Trabucco wanted those consequences “to be fair—not too light, not too excessive, but fair.” (Trabucco appears to believe Salame’s judge was named Goldilocks.)
When Trabucco’s letter was revealed, it reawakened public cries for the U.S. Department of Justice (DoJ) to locate and prosecute Trabucco already. Given the harsh custodial sentences meted out to SBF and Salame, Trabucco seems in line for similar treatment, as well as some serious forfeiture and restitution tallies. Particularly since he, too, withdrew “substantial” sums from FTX when he sailed into the sunset on a yacht that he bought with customer cash.
Sorry (not sorry)
In a bizarre twist, Salame returned to X/Twitter following his sentencing, issuing his first tweets since shortly before FTX’s bankruptcy. Incredibly, he’s never seen fit to delete some of his more embarrassing tweets from that period, including one five days before the filing that claimed: “It’s not hard to genuinely figure out who cares about customers and who doesn’t if you look past the insanity.”
Salame’s first post-sentence tweet said only, “hot damn, this is going to get interesting quickly,” with ‘this’ apparently a reference to his getting to play the ‘fresh fish’ game. Salame also claimed his ‘figure out who cares about customers’ tweet from November 2022 made him “cringe” after he “found out half of FTX customers money was somehow missing.”
When some former FTX customers began berating Salame, he responded with, “I didn’t steal shit,” then played for sympathy by claiming how much it “sucks that if I had just sold off my pile of crypto like I was going to instead of listening to multiple lawyers and borrowing from Alameda against it instead, I likely wouldn’t be going to prison for seven and half years.”
Few appear to be buying Salame’s ‘see no evil’ act. Particularly when one reads the independent examiner’s report into FTX’s demise. The 225-page tome (link here will download the file) has a section dedicated to Salame’s role in the debacle that includes the following:
“Salame assisted with the creation of the backdated payment agent agreement [between FTX and Alameda]; made or directed other FTX Group employees to make misrepresentations to banks about the purpose of FTX Group bank accounts; misappropriated FTX Group assets to buy real estate, restaurants, and food service companies, and to make other purchases and investments, including a private jet; and withdrew millions of dollars from his FTX.com account shortly before FTX.com halted customer withdrawals.”
The loan arranger
Salame’s name also appears in the report in connection with two $50 million loans that benefited Deltec International Group, the parent of Bahamas-based Deltec Bank & Trust. The report claims the loans “were intended to ameliorate Deltec’s capital issues while ensuring that Deltec would ‘owe’ the FTX Group as a result, and the related promissory notes were structured to conceal Alameda’s role in the loans.”
The report said that the FTX Debtors group appointed to handle FTX’s post-bankruptcy affairs eventually “reached a settlement regarding the loans, with Deltec agreeing to pay the value of the loan with interest and the remaining obligations extinguished.”
On May 28, Salame tweeted that he had “no idea about” the loan “until after FTX collapsed. Not a dollar ever touched my account and the receiver had no clue I didn’t know about it.”
Deltec acted as banker for both FTX/Alameda and the Tether (USDT) stablecoin, which issued Alameda tens of billions worth of USDT. The fact that Deltec’s finances were apparently so unsound that it occasionally relied on eight-figure loans from customers to stay afloat is prompting even more questions regarding Deltec’s previous role as custodian of the real-world assets allegedly backing USDT.
Bear in mind that, on May 17, the DoJ announced charges against two Chinese nationals involved in a ‘pig butchering’ scam that relied on USDT to launder ‘at least’ $73 million derived from their scams. The scammers “transferred the proceeds overseas to bank accounts at Deltec Bank in The Bahamas.”
Friedberg blows whistleblowers
There are other eyebrow-raising revelations contained in the FTX examiner’s report, including SBF’s former general counsel/fixer Daniel Friedberg paying $25 million to quiet a number of ‘whistleblowers’ who claimed to have knowledge of FTX/Alameda’s pre-bankruptcy criminality.
FTX Debtors sued Friedberg last June for a variety of alleged crimes, including paying “exorbitant hush money” to a series of ex-staff and attorneys who were threatening to go public with a list of FTX/Alameda malfeasance. Said crimes included market manipulation via pump-and-dump schemes that enriched FTX/Alameda principals at their customers’ expense.
One of these unidentifed ‘whistleblowers’ was an executive at FTX’s U.S.-facing exchange FTX.US, who wrote to SBF, Singh and Friedberg detailing how the FTX Group had “misled regulators and investors and lacked adequate corporate structure.” Friedberg responded by scolding the whistleblower but still arranged a settlement worth over $16 million just two months before the bankruptcy.
Former FTX.US president Brett Harrison, who resigned in September 2022, apparently felt sufficiently unnerved by public speculation that he was the recipient of this generosity that he tweeted a denial of being paid $16 million via a ‘settlement.’ Harrison said he was “permitted to keep a portion of my equity in the company upon leaving” but was barred from selling this equity on the secondary market until a month after the bankruptcy.
On the road again
Finally, SBF’s stay at Brooklyn’s Metropolitan Detention Center (MDC) may be over. SBF had been held at MDC ever since Judge Kaplan revoked his bail last August after SBF showed he had no intention of abiding by the terms of his release while awaiting trial at his parents’ home in California. SBF was returned to MDC following his sentencing in March.
On May 22, the Wall Street Journal reported that SBF might serve the rest of his 25-year sentence at a federal prison in Mendota, California, so that SBF could be closer to his parents. But on the same day, Judge Kaplan signed an order recommending that SBF continue to be held at MDC in order to be close to his legal counsel while the appeal of his conviction was ongoing.
Yet, as of May 23, SBF was reportedly being housed at the Federal Transfer Center in Oklahoma City, which is typically a waystation for prisoners transported through the U.S. Marshals Service or other federal law enforcement bodies and the Bureau of Prisons.
We can only presume this is part of the vast conspiracy by the feds, the Illuminati, and the ghost of Amelia Earhart to facilitate SBF’s escape from justice so he can relaunch FTX from a secret underground location because that’s just about how stupid this whole sordid saga has become.
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