A federal judge sentenced former FTX executive Ryan Salameh to more than seven years in prison on Tuesday, making him the first of the collapsed crypto tycoon Sam Bankman Freed’s inner circle to receive prison time for his role in the crypto exchange’s 2022 collapse.
Salameh, 30, who served as an executive at exchange FTX for much of its existence and was co-CEO of FTX Digital Markets before the exchange’s collapse, pleaded guilty last year to making illegal U.S. election contributions and operating an unlicensed money transmitting business.
The sentence of seven and a half years in prison and three years of probation was longer than the five-to-seven-year sentence that prosecutors had asked Judge Lewis A. Kaplan to impose on Salameh in a pre-sentence memo.
Although Salameh was an executive at FTX, he was not a key player in the government’s case and did not testify against Bankman Freed at his trial earlier this year. In seeking a lenient sentence, Salameh said at his sentencing hearing that he had cross-examined Bankman Freed and even cooperated and provided documents to assist the prosecution in their own prosecution.
Not only did Salameh help Bankman Freed hide holes in FTX’s balance sheet that ultimately led to the exchange’s collapse, but he was also used as a conduit for Bankman Freed to make illegal campaign contributions to help shape U.S. policy regarding cryptocurrencies. On the surface, Bankman Freed made political donations primarily to Democrats and liberal-leaning causes, while Salameh donated to Republicans and right-wing causes.
But as it turned out, the funds Salameh used to donate came from Bankman Freed.
Kaplan said Salameh “knew exactly what he was doing… and his goal was to hide it from the world. Astonishing!”
The judge also harshly criticized Salameh for withdrawing $5 million worth of cryptocurrencies from FTX while the exchange was in bankruptcy.
“They tried to extract tens of millions more dollars,” Kaplan said. “It was like, ‘Me first. I’m going to get on the lifeboat first. Who cares about all these customers?'”
Salameh apologized to FTX customers and families and said he and others had good intentions, but added that he “fully understands that the means I sought to achieve these ends were unlawful.”
Before the sentence was handed down, Salameh issued a short statement saying he had “begun the path to redemption.”
“I accept what happens next,” he said.
Three other senior FTX executives are awaiting sentencing for their roles in the exchange’s collapse: Caroline Ellison, CEO of hedge fund Alameda Research, FTX co-founder Gary Wang, and FTX head of engineering Nishad Singh. All three cooperated with prosecutors and testified at Bankman Fried’s trial in exchange for suspended prison sentences.
