By
Bena Ilyas
June 5th, 2024
FTX executive Ryan Salame faces two major allegations. First, Salame helped FTX accept customer deposits via a US bank account without proper licensing. Second, Salame is accused of serving as a straw donor for Sam Bankman-Fried.
The fallout from the dramatic collapse of the crypto exchange FTX continues. Former executive Ryan Salame may face a prison sentence of five to seven years. Prosecutors asked for this tough sentence in a memo filed on May 20, 2024, in a federal court in Manhattan.
Salame, who is 30 years old, pleaded guilty to criminal charges related to the FTX collapse. Prosecutors argued that “serious crimes” were committed, requiring “a substantial sentence” to deliver fair punishment. However, Salame’s defence team suggested a lighter sentence of no more than 18 months.
The government’s case is based on two main claims. First, prosecutors accuse Salame of helping FTX accept customer deposits through a U.S. bank account without the necessary licensing. This evaded regulatory oversight and put users at risk.
Second, Salame is accused of acting as a straw donor for FTX co-founder Sam Bankman-Fried. That means he carried over political donations through a third party to hide the real source of the funds. The memo points out that these donations were massive, calling them “one of the largest-ever campaign finance offences in American history”.
First Punishment for Inner Circle
Salame’s sentencing carries particular weight as it marks the first punishment for a high-ranking member of Bankman-Fried’s inner circle. Bankman-Fried himself is appealing a 25-year prison sentence handed down in March. Other former FTX executives, Caroline Ellison, Nishad Singh, and Gary Wang, who cooperated with authorities, await their sentencing dates.
Salame joined FTX’s affiliated hedge fund, Alameda Research, in 2019. Before his Bahamas relocation in 2021, he served as an accountant. During this tenure, prosecutors allege Salame facilitated the unlicensed transactions and illegal political contributions.
Salame’s defense portrays him as a first responder within the FTX implosion. His lawyers claim he was the first FTX figure to alert Bahamian authorities about potential fraud in late 2022. This paints a picture of someone seeking to rectify the situation, contrasting sharply with the prosecution’s portrayal of conscious wrongdoing.
FTX Executive’s Rehabilitation Efforts
Salame’s defence focuses on his efforts to improve after FTX’s collapse. Since pleading guilty in September, he has welcomed his first child with his long-term partner and sought treatment for substance abuse. His attorneys described him as a “good man” influenced by a manipulative leader Sam Bankman-Fried.
This portrayal contrasts sharply with the prosecution’s call for a 10-year sentence, as recommended by US probation officials. Salame agreed to forfeit $6 million in assets, including a restaurant in his Massachusetts hometown, as part of his plea deal. His sentencing memo also included letters of support from friends and family.
The upcoming sentencing on May 28 will be a significant moment, setting a standard for penalties faced by other FTX executives. The case highlights the serious consequences of crypto fraud and illegal campaign finance activities.