Transcript: Sam Bankman-Fried gets 25 years in prison

This is an audio transcript of the FT News Briefing podcast episode: ‘Sam Bankman-Fried gets 25 years in prison’

Sonja Hutson
Good morning from the Financial Times. Today is Friday, March 29th, and this is your FT News Briefing.

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FTX founder Sam Bankman-Fried got a big prison sentence. And British utility company Thames Water is in turmoil. Plus, it turns out instant noodles can tell us oodles about the global economy. I’m Sonja Hutson, and here’s the news you need to start your day.

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Shareholders dealt Thames Water another major blow yesterday. They backtracked on their promise to inject £500mn of equity. That’s a big financial setback for Britain’s biggest water provider. The utility’s really been struggling lately. It needs billions of pounds to maintain operations and overhaul its ageing infrastructure. Now, it’s not game over for Thames Water just yet. The company could do a debt-for-equity swap or it could even renationalise. But the stakes are high. Consumers will likely have higher bills to pay and investors could lose a lot of money.

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A judge sentenced Sam Bankman-Fried to 25 years in prison yesterday. The cryptocurrency exchange he founded, FTX, collapsed in 2022 and Bankman-Fried was found guilty of fraud and money laundering last year. Here to talk to me about the sentencing and what happens next is the FT’s Joe Miller. Hi, Joe.

Joe Miller
Hi. Good to be with you.

Sonja Hutson
Good to have you on the show. So first off, just how significant is this sentence?

Joe Miller
Well, this ranks up there with one of the longest sentences ever given to a white-collar criminal in the US. The imposition of 25 years, which is a lot more than the six and a half years Sam Bankman-Fried’s defence lawyer said he deserved, is something that shocked even observers of this court for a very, very long time. And when you listen to what Judge Kaplan said in sentencing, that is in no small part due to how Sam Bankman-Fried behaved throughout this trial and his posture since being arrested and charged, in which he repeatedly maintained his innocence, and the judge said, lied on the stand several times, tried to intimidate a witness, and, in short, did nothing to help himself get a lighter sentence. And that, the judge said, was why he saw the need to impose such a lengthy sentence.

Sonja Hutson
What about Bankman-Fried’s defence attorneys, what did they say? What was their argument?

Joe Miller
So the defence attorneys have had two arguments. The first one was about Sam Bankman-Fried’s character. They said it was a mistake to paint him as a depraved criminal. They said he was an awkward maths nerd and had no malice in his heart, never intended to do any harm, but was flying by the seat of his pants, so to speak, and got caught. You know, running a multibillion-dollar business by some headwinds in the crypto markets. Their second gambit was that actually, as it transpires, the amount of loss incurred as a result of FTX’s bankruptcy is far less than had originally been envisioned, and perhaps maybe even zero. And they were basing that off the fact that the bankruptcy proceedings, which is going on in parallel to the criminal proceedings against Bankman-Fried, we’ve heard over there that creditors, former customers of FTX, may get at least 100 per cent of their, what their claims were worth at the time of the bankruptcy, if not more than that.

Sonja Hutson
Wow. How is that possible?

Joe Miller
Well, it’s possible for two reasons. One, there’s been a real boom in the crypto markets once again. As you may have noticed, bitcoin and other coins are back to near all-time highs and many of the underlying assets in the bankruptcy are therefore worth a lot more. And there were a bunch of other investments that Bankman-Fried made, which are also now worth more than they were at the time of the bankruptcy in November 2022. And so, based on all of that, John Ray, who is overseeing the bankruptcy proceedings, has suggested that victims may get back some of what their claims were worth at the time all of this collapsed. But it has to be pointed out that that is not necessarily the same. And the judge agreed with this as saying no one suffered any losses because if you had, say, bitcoin in FTX, you will get the value of what that bitcoin was in November 2022, which is obviously a lot lower than it would be now if you still held on to those coins and those coins are not there, John Ray in the bankruptcy said, because Bankman-Fried stole them.

Sonja Hutson
So bringing it back to yesterday’s sentencing, you know, this is the end of the Sam Bankman-Fried criminal saga, at least for now. His lawyers are planning to appeal. But what lessons can we take away from this case?

Joe Miller
It’s interesting that as Sam Bankman-Fried was being sentenced, other crypto assets were doing quite well. We’re going through a revival in some ways of the crypto space. So it’s safe to say that if this sentence was meant to have a chilling effect on the space as a whole, it has not done so. And even in his sentencing, it was clear that Judge Kaplan felt that Bankman-Fried was almost unique as a defendant in that he had talked himself into such a large sentence. And so this was very much a sentence imposed against Sam Bankman-Fried, and perhaps not as strong as a signal as prosecutors might have hoped for the crypto sector as a whole.

Sonja Hutson
Joe Miller is the FT’s US legal correspondent. Thanks, Joe.

Joe Miller
Thank you very much.

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Sonja Hutson
Global insurance companies should, quote, just get on with it and pay to repair Baltimore’s Francis Scott Key Bridge, rather than waiting years to figure out who’s liable. That’s what John Neal, the chief executive of the Lloyd’s of London insurance market, told the FT yesterday. Neal made the comments after US President Joe Biden said the federal government would fund the bridge’s reconstruction in order to speed things up. Insurers are expecting billions of dollars of claims to cover repairs and the cost of interruptions at a busy US port. Neal said it could end up being the largest marine insurance claim in history.

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Instant noodles are a powerful weapon against starvation. They’re super high in calories, easy to store, and basically everywhere. Fun fact, the FT’s Asia business editor actually calculated that if the world’s annual supply of cooked instant noodles were joined together end to end, they would stretch into space well past Pluto.

Leo Lewis
Yeah, if you multiply the tens of billions of packs that are sold each year, each one with about 50m, you do get to some quite remarkable distances far into outer space.

Sonja Hutson
But their rise in popularity is not really a cause for celebration. Leo Lewis is here to talk to me about it. So, Leo, tell me a little bit about the history of the instant noodle. I mean, what’s its backstory?

Leo Lewis
Yeah. So look, instant noodles have been a matter of very great pride to Japan. In fact, that, you know, there’d been surveys that were done over the years in which, you know, all of the great Japanese inventions were sort of laid out. And I think people think very highly of noodles, partly because they have this very central role in the minds of a lot of people, particularly older Japanese, as something of a saviour of the country in its hour of need. There was a period after the second world war when Japan was fighting starvation. The population was much smaller. And, you know, the idea of this big calorie hit that only required water was seen very much as this way of, sort of, feeding the masses very cheaply when they needed it.

Sonja Hutson
So how did the instant noodle then spread out of Japan and become so popular around the world?

Leo Lewis
Yeah. So instant noodles, you know, would travel well, that’s the point about them that they don’t need refrigeration, they don’t go off. You know, they can sit in these polystyrene or plastic containers for a very great length of time without being so degraded. And so Japan was able to send these things off around the world. I think America, for a long period, there was a big advert for instant noodles above Times Square. You know, it was a food that hit the rest of the world in the 80s and made a very big impact, and now absolutely everywhere.

Sonja Hutson
Yeah. So now that they are everywhere, what does the popularity of noodles tell us about a country’s economy?

Leo Lewis
You know, it didn’t surprise me that in parts of the world, the developing countries and so on, that you would find noodles filling a gap as global commodity prices rise. As we know, in poorer countries, the proportion of food within a household budget is always very much more significant than it is in wealthier countries. What I thought was surprising was the continued growth that we were seeing in wealthier countries. And obviously, I was very interested in the US. But it’s true also in the UK and other European countries and elsewhere, that you’re seeing this growth in instant noodle consumption at a time when there is that much more sensitivity by households to food price inflation. And, you know, noodles as a business is very, very strong. But actually what you’re looking at is fragility. You’re looking at increased sensitivity of households around the world to rising food prices. And I think it’s one of those signals that we have entered an era where there is that very high level of vulnerability.

Sonja Hutson
Right, it’s almost like noodles are an economic indicator in some ways.

Leo Lewis
The noodle index, yeah, exactly.

Sonja Hutson
Noodle index, I like that. OK, Leo Lewis is the FT’s Asia business editor. Thanks, Leo.

Leo Lewis
My absolute pleasure. Thank you.

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Sonja Hutson
Before we go, a quick note to let you know that our weekly US politics show, Swamp Notes, will be taking the week off. That’s not to say it was a quiet week in US politics, though. Congress finally passed bills to fund the government, third-party presidential candidate Robert F Kennedy Jr picked a running mate and Donald Trump introduced a $60 Bible to help fund his campaign. Happy Easter folks!

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You can read more on all these stories at FT.com for free when you click the links in our show notes. This has been your daily FT News Briefing. Make sure you check back next week for the latest business news. The FT News Briefing is produced by Kasia Broussalian, Fiona Symon, Marc Filippino and me, Sonja Hutson. Our engineer is Monica Lopez. We had help this week from Ethan Plotkin, Kyra Assibey-Bonsu, Zach St Louis, Sam Giovinco, David da Silva, Michael Lello, Peter Barber and Gavin Kallmann. Our executive producer is Topher Forhecz. Cheryl Brumley is the FT’s global head of audio. And our theme song is by Metaphor Music.