Former FTX Executive Ryan Salame Sentenced to 90 Months in Prison Following Reimbursement Plan Rollout

Not long ago, cryptocurrency exchange FTX has decided to move forward with a plan that could fully reimburse some of its creditors for their losses. However, the reimbursements will be in cash, excluding any gains from the surge in digital asset prices since the exchange’s collapse in November 2022.

FTX detailed the proposed bankruptcy plan in a recent news release, outlining a path to provide relief to 98% of its creditors, including individual investors who had $50,000 or less with the company. If the plan is approved by both the court and creditors, these individuals can expect to receive the full amount of their lost funds within 60 days of the plan’s implementation.

The plan aims to distribute the majority of FTX’s assets, valued between $14.5 billion and $16.3 billion, to creditors and customers worldwide. This amount surpasses the total debts owed to creditors, estimated at $11 billion.

Former FTX Executive Ryan Salame in Trouble

However, on a legal level, a new major development has unraveled. Ryan Salame, the former co-CEO of FTX’s Bahamian subsidiary and a key associate of the cryptocurrency exchange’s founder, Sam Bankman-Fried, was sentenced on Tuesday to 90 months in prison, according to U.S. federal prosecutors. Salame pleaded guilty in September to making tens of millions of dollars in unlawful campaign donations to support causes favored by his boss.

Salame’s sentencing comes in the wake of the conviction of Sam Bankman-Fried, who was sentenced earlier this year to 25 years in prison for misappropriating $8 billion from FTX customers. A jury found Bankman-Fried guilty in November on seven fraud and conspiracy counts related to the collapse of FTX in 2022, an event prosecutors have described as one of the biggest financial frauds in U.S. history.

Prosecutors allege that Salame, Bankman-Fried, and former FTX engineering chief Nishad Singh used customer funds to make political donations aimed at promoting crypto-friendly legislation. Salame, who could not be reached for comment according to CNN, had donated over $24 million to Republican candidates and causes during the 2022 election cycle, making him one of the top donors of that year, according to Federal Election Commission data.

In addition to his prison term, Salame, 30, was sentenced to three years of supervised release and ordered to pay more than $6 million in forfeiture and over $5 million in restitution. Prosecutors said Salame’s actions had significantly undermined public trust in American elections and the integrity of the financial system.

Salame’s guilty plea was a significant turn of events. Initially, his attorney had indicated that Salame would invoke his Fifth Amendment rights against self-incrimination if called as a witness in Bankman-Fried’s trial. However, Salame later admitted to one count of conspiracy to make unlawful political contributions and one count of conspiracy to operate an unlicensed money transmitting business. He faces a maximum of 10 years in prison and has agreed to forfeit $1.5 billion, make restitution of $5.6 million to FTX debtors, and pay $6 million to the U.S. government. His sentencing is set for March 6, 2024.

Salame’s attorney, Jason Linder, expressed that Salame looks forward to putting this chapter behind him and moving forward with his life.

Three other FTX insiders—Caroline Ellison, former head of Alameda Research; Gary Wang, co-founder of FTX; and Nishad Singh—have also pleaded guilty and are cooperating with authorities. Prosecutors allege that Salame and Singh made over 300 political donations totaling tens of millions of dollars using FTX customer funds, thereby masking Bankman-Fried’s role and exceeding federal contribution limits.

Prosecutors contend that Bankman-Fried misused customer funds to make loans to Alameda, fund venture investments, and support a network of straw donors who contributed to political campaigns. They claim Salame played a significant role in this scheme, which was intended to influence policy decisions impacting the crypto industry.

Damian Williams, U.S. Attorney for the Southern District of New York, stated, “Salame’s involvement in two serious federal crimes undermined public trust in American elections and the integrity of the financial system.”