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One of Sam Bankman-Fried’s top deputies who pleaded guilty to financial crimes following the collapse of cryptocurrency exchange FTX is due to be sentenced on Tuesday — the first of several company executives who will learn how much time they will spend behind bars for their roles in the firm’s implosion.
Ryan Salame, who was co-CEO of FTX Digital Markets, the company’s Bahamas-based subsidiary, could be locked up for up to seven years if Department of Justice prosecutors get their way.
Salame’s attorneys, however, say that their client should serve no more than the minimum 18 months.
US probation officials have advocated for an even harsher penalty — 10 years in prison.
Judge Lewis A. Kaplan’s ruling on Salame’s sentence could be an indicator of how hard he will crack down on the other FTX executives who have cooperated with federal investigators in exchange for more lenient pleas in court.
Last September, Salame pleaded guilty to campaign finance offenses as well as operating an unlicensed money-transmitting business exchanging over $1 billion without proper supervision.
Salame’s lawyers argue for leniency by pointing out that he was the first FTX executive to alert authorities in the Bahamas to potential fraud as early as late 2022 — days before the company filed for bankruptcy.
Bankman-Fried was sentenced to 25 years in prison earlier this year after he was convicted of using billions of dollars worth of customer deposits to cover risky bets made his by hedge fund, Alameda Research.
Bankman-Fried also used FTX customer funds to make more than $100 million in political contributions before the 2022 elections and to buy a ritzy $40 million Bahamian penthouse where he and his colleagues lived and worked, prosecutors said.
Other FTX executives in Bankman-Fried’s inner circle, including on-again, off-again girlfriend Caroline Ellison, Nashad Singh and Gary Wang, have yet to be sentenced.
All three pleaded guilty to financial wrongdoing and agreed to testify against Bankman-Fried in court. They are due to be sentenced later this year.
Unlike Ellison, Singh and Wang, Salame did not sign up as a cooperating witness, though he did hand over nearly 600,000 pages of documents to authorities.
His attorneys claim that Salame was “duped, as was everyone else, into believing that the companies were legitimate, solvent and wildly profitable,” according to a memo filed with US District Court in Manhattan.
As part of his plea deal, Salame agreed to forfeit more than $1.5 billion, though accepted his turning over of $6 million, two Massachusetts properties, his interest in a company called East Rood Farm, and a 2021 Porsche to satisfy the judgment.
East Rood is the company through which Salame owns a tavern in Lenox, Massachusetts, according to a 2021 report in the Berkshire Eagle.
Salame also agreed to pay $5.6 million in restitution to FTX in its ongoing bankruptcy proceedings.
His attorneys will also seek to persuade the judge by noting that their client has been raising his first child with longtime partner Michelle Bond while seeking treatment for substance abuse.
“He has been a good man who has done much good in this world, who conspired to commit two crimes while in the thrall of a criminal leader who had beguiled captains of industry and politics far savvier than Ryan,” his attorneys wrote in a court filing cited by Bloomberg News.
But federal prosecutors argue that a “substantial sentence” is needed in order to deter others from committing similar crimes.
“Would-be violators of the campaign finance laws must understand that these are not minor offenses,” they wrote.
“And players in the crypto industry, who are serial offenders of the money transmission laws, must understand that they disregard the registration requirements at their peril.”
The sentencing memo filed by Salame’s lawyers included letters from 28 people, among them family and friends, who pleaded for leniency.
Bond unsuccessfully ran in the GOP primary for the Long Island congressional seat vacated by former Rep. Lee Zeldin.
Federal investigators alleged that Salame illegally avoided federal limits on political contributions by arranging for loans and payments to his girlfriend’s campaign.
Those charges were filed separate from Salame’s role at FTX.
Salame joined Alameda in 2019, two years after Bankman-Fried founded it, and became co-chief executive of FTX’s Bahamian affiliate in late 2021.
He worked for Ernst & Young and Circle Internet Financial before joining FTX Digital Markets.
While at Alameda, Salame said he used the fund’s bank accounts to help FTX customers transfer fiat currency to the exchange, even though neither company was licensed as a money services business as required by law.
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