Ryan Salame, a former top executive at the now-defunct cryptocurrency exchange FTX, has been sentenced to seven and a half years in prison, marking the first sentencing of a senior figure involved in the scandal that rocked the crypto world. This follows his guilty plea to charges of conspiracy to make unlawful political contributions and to operate an unlicensed money-transmitting business.
In addition to his prison term, Salame will face three years of supervised release and has been ordered to pay over $6 million in forfeiture and more than $5 million in restitution.
The sentence handed down by Judge Lewis A. Kaplan exceeded the five to seven years recommended by prosecutors and was significantly harsher than the 18 months requested by Salame's defense team. Salame's sentencing is a critical development in the broader investigation into the collapse of FTX, once one of the most prominent cryptocurrency exchanges in the world.
Salame, who transitioned from a high-ranking role at Sam Bankman-Fried's crypto hedge fund Alameda Research to co-CEO of FTX's Bahamian subsidiary, FTX Digital Markets, played a significant role in the company's operations. During his tenure, he was involved in lavish spending on real estate and political contributions. Reports indicate that Bankman-Fried and Salame spent approximately $256.3 million on 35 properties across New Providence, which Bahamian regulators are now seeking to reclaim as part of FTX's U.S. bankruptcy proceedings. Furthermore, Salame made political contributions exceeding $24 million to Republican candidates and causes during the 2022 election cycle.
Former FTX Executive Ryan Salame Sentenced to 7.5 Years in Prison pic.twitter.com/827ILKxSoT — Altcoin Daily (@AltcoinDailyio) May 28, 2024
In a dramatic turn of events, just days before FTX filed for bankruptcy in November 2022, Salame approached Bahamian authorities to disclose potential fraud by Bankman-Fried, revealing that customer funds had been misappropriated and transferred from FTX to Alameda Research. This revelation was one of the first public indications of internal dissent within FTX's leadership and significantly contributed to the subsequent legal actions against Bankman-Fried.
Judge Kaplan, who earlier this year sentenced Bankman-Fried to 25 years in prison, emphasized the gravity of Salame's actions. "Salame's involvement in two serious federal crimes undermined public trust in American elections and the integrity of the financial system," said U.S. attorney Damian Williams. Kaplan also criticized Salame for attempting to withdraw $5 million in cryptocurrencies from FTX as the exchange was collapsing, highlighting the executive's self-serving actions during the crisis.
Salame's cooperation with the authorities, which included providing documents that aided the prosecution's case against Bankman-Fried, did little to mitigate his sentence. While he did not testify against Bankman-Fried, his contributions were noted during his sentencing hearing.
Salame's downfall is part of a broader narrative involving other high-ranking FTX executives who have also faced legal scrutiny. Caroline Ellison, the former CEO of Alameda Research and Bankman-Fried's ex-girlfriend, along with FTX co-founder Gary Wang and former head of engineering Nishad Singh, have all cooperated with prosecutors and provided critical testimony against Bankman-Fried. Their cooperation is likely to result in lighter sentences, contingent on the outcomes of their respective cases.
Salame's legal troubles also underscore the complex and intertwined nature of the FTX scandal, which has drawn attention to the regulatory and operational failures within the cryptocurrency industry. The case has prompted calls for stricter oversight and more robust regulatory frameworks to prevent similar occurrences in the future.
