Ex-FTX Executive Ryan Salame Sentenced to Over 7 Years in Prison

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Facts

  • Ryan Salame, the former top executive at the defunct cryptocurrency exchange FTX, was sentenced to seven-and-a-half years in prison for campaign finance law violations and for operating an unlicensed money-transmitting business.1
  • The first of FTX founder Sam Bankman-Fried's subordinates to be convicted since the exchange's collapse in late 2022, Salame will also serve three years of supervised release, forfeit $6M, and pay more than $5M in restitution.2
  • He pleaded guilty to making more than $100M in over 300 individual donations to US political candidates as a straw donor on behalf of Bankman-Fried, using money taken from FTX's affiliated hedge fund, Alameda Research.3
  • Caroline Ellison, Nishad Singh, and Gary Wang are the other three FTX executives to plead guilty to federal crimes. Salame was the only co-accused not to testify for the prosecution in the case that led to Bankman-Fried's 25-year sentence in March.3
  • Probation officials had advocated for a 10-year sentence at trial. However, Salame's defense argued that the ex-Chief Executive Officer of FTX's Bahamian subsidiary was one of the first to bring attention to the fraud and provided prosecutors with 600K pages of evidence.4
  • While Salame's lawyers argued that he was 'merely a tool' of FTX and was unaware of FTX stealing from customers, presiding Judge Kaplan ruled that his sentence would warn against 'perverting our electoral system and its rules.'1

Sources: 1New York Times, 2CNBC, 3ft.com and 4New York Post.

Narratives

  • Narrative A, as provided by New York Times. The FTX saga has revealed an intrinsic problem with cryptocurrency that was bigger than Sam Bankman-Fried or any of his underlings. What FTX was found guilty of is par for the course in the cryptocurrency world, as an entity built on imaginary tokens it produced itself. This problem doesn't end with FTX, and it may be the fatal flaw at the heart of all cryptocurrency ventures.
  • Narrative B, as provided by Wsj. While Bankman-Fried's mistakes have cast a shadow over the crypto world, the fact is that too much regulation, not a lack of it, made this possible. By keeping centralized deposits, FTX was tempted to skim off customers' money. The blockchain allows for decentralized exchanges that use 'smart contracts' to have every cent accounted for. What brought down FTX was a flaw in humanity, not cryptocurrency itself.

Predictions