Federal judge to sentence former crypto mogul today

FTX DIGITAL MARKETS SCANDAL

The Berkshire Eagle

LENOX - Fallen crypto executive Ryan Salame faces a likely prison term when he's sentenced Tuesday at federal court in Manhattan.

How much prison time will the former Lenox restaurateur and real estate investor face? That's up to Judge Lewis Kaplan, who will preside and decide as he hears sentencing recommendations from the U.S. attorney's office and Salame's attorneys. The former executive at the FTX Digital firm and its related Alameda Research hedge fund based in the Bahamas could get five to seven years, as proposed in a 30-page sentencing document filed by prosecutors at the court earlier last week.

The Sandisfield native was involved in serious financial and political misconduct that resulted in guilty pleas. The charges include operating a $1 billion- plus money-transmitting business without a license and making more than $100 million in illegal campaign contributions, one of the largest ever in U.S. history, mostly to Republican candidates for U.S. Congress in 2022.

According to the May 21 court filing by Damian Williams, U.S. Attorney for the Southern District of New York, due to the gravity of Salame's offenses he should be punished with significant prison time.

Williams argued that a stiff sentence would ensure justice and act as a future deterrent to illegal cryptocurrency machinations while advancing respect for the law.

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Williams cited Salame's close and loyal working relationship with Sam Bank-man Fried, the founder of FTX and Alameda, who was sentenced to 25 years in federal prison on April 1 and is planning an appeal.

But in its own sentencing proposal filed on May 14, Salame's defense team is seeking a lenient term of no more than 18 months behind bars. They noted his plea agreement with prosecutors and that he was considered by many as "an outstanding member of the community."

The defense's court document also notes that Salame would miss important milestones for his children and stepchildren and it cites his philanthropy and community service, including activities before he was an executive at FTX and Alameda.

"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," Salame's attorneys wrote, referring to Bank-man Fried. They also mentioned his "genuine remorse, efforts to address his substance abuse issues, and the significant personal and financial losses he has already suffered as a result of the exchange's collapse."

"He had absolutely no knowledge that the four people at the center of Alameda and FTX had conspired to lie and to steal from their customers," the defense attorneys stated in the court filing. "Ryan stole from no one. He did not lie to customers. He was duped. When he finally understood the FTX fraud, he was the first person to blow the whistle to authorities in the Bahamas."

They also wrote that Salame's involvement with FTX will shadow any future career prospects. "As was true for thousands of other FTX employees, customers, investors, and lenders, Ryan lost years of hard work and nearly his entire net worth almost instantaneously," the defense's court filing stated. "Ryan, who was not part of Sam Bankman-Fried's innermost circle, was unaware of the crimes at the center of this case."

But Williams called the defendant's requested 18-month sentence "too lenient" and the reasons for the leniency "inadequate."

The U.S. attorney described Salame's cooperation with prosecutors as "relatively minor" and informal since he declined to meet with prosecutors or testify at Bank-man Fried's trial; instead, he provided information, including various documents sought by the government.

"None of the information resulted in any significant investigative leads, arrests or charges," Williams wrote.

The prosecutor's court document states that "it is only logical that he should face a lengthier sentence than offenders whose crimes involved significantly smaller amounts of money, which cause fewer risks to the financial system and a smaller chance that the unlawful contributions would affect elections and thus distort legislation."

At least $10 billion in customers' investments into the FTX cryptocurrency exchange went missing, leading to the company's bankruptcy filing in November 2022. Attorney John J. Ray III, a Pittsfield native named as head of the company after the filing, has recovered much of that money and has signaled that investors will be made whole, plus interest.

Since March, following the government's seizure last fall of Salame's prime asset, the Olde Heritage Tavern in Lenox plus two residential properties nearby and his Porsche sports car, he sold off his remaining Lenox business and real estate holdings, which fetched $5.4 million.

But his private Triumph airfield in North Canaan, Conn., remains on the market with a $2 million asking price.

Salame owes the U.S. government about $11.6 million of assets for part of the payback to defrauded FTX customers and other penalties, including fines. Pending Tuesday's sentencing, postponed from two earlier dates this spring, he has been free on $1 million bond.

Clarence Fanto can be reached at [email protected].

Former FTX CEO Ryan Salame leaves a Manhattan court after pleading guilty to criminal charges last September in New York City. Salame, a Sandisfield native, faces sentencing today. SPENCER PLATT - GETTY IMAGES