Two former billionaires from the world of digital currencies were sent behind bars over the past two years — their rapid rise to wealth was followed by an even faster fall. Sam Bankman-Fried and Alex Mashinsky once possessed fortunes worth billions of dollars, but now they have received prison sentences for defrauding investors' assets.
Sam Bankman-Fried: from $26 billion to a prison cell
Sam Bankman-Fried was called the modern J.P. Morgan. At the peak of his career, his net worth was estimated at $26.5 billion, and he lived in a $30 million penthouse in the Bahamas. Today, Bankman-Fried is serving time in a federal prison in San Pedro, California.
Born on March 6, 1992, he graduated from the Massachusetts Institute of Technology with a degree in physics. In 2014, he joined the quantitative trading firm Jane Street Capital, where he engaged in arbitrage trading of exchange-traded funds. Three years later, he left the firm, becoming interested in digital currencies.
Started by buying Bitcoin in the US and selling it for profit in Asian markets. In September 2017, he founded Alameda Research, assembling a small team.
In 2019, Bankman-Fried launched the cryptocurrency exchange FTX, which in two years transformed into a global empire. By 2021, FTX moved to the Bahamas, and its founder became a billionaire. "As of 11:30 AM Thursday, he is the 25th richest person in America and the 64th richest in the world," Forbes reported on October 21, 2021.
The facade crumbled in November 2022, when FTX filed for bankruptcy. It was discovered that $8.7 billion in client funds had vanished. It became clear that FTX used client deposits to fund risky bets through its subsidiary Alameda Research.
In December 2022, authorities arrested Bankman-Fried in his penthouse in the Bahamas and extradited him to the U.S. On March 28, 2024, he was sentenced to 25 years in prison on seven counts of fraud and conspiracy.
«Samuel Bankman-Fried has been sentenced to 25 years in prison, three years of supervised release, and is required to pay $11 billion in forfeiture for orchestrating multiple fraudulent schemes,» noted the Department of Justice.
In 2025, the former head of FTX began reaching out to President Trump for a pardon. Quite ironically, considering that Bankman-Fried was the second-largest donor to the Democratic Party in the 2020 elections. According to Business Insider, with good behavior, he could be released in December 2044.
Alex Mashinsky: the downfall of the 'banker' of digital currencies
Alex Mashinsky was an experienced entrepreneur who founded Celsius Network in 2017 — a platform for borrowing and lending digital assets. He created an image of a bank fighter, wore T-shirts with the slogan "Banks are not your friends" and conducted YouTube streams "Ask Mashinsky Anything".
During the pandemic, Celsius gained popularity by offering loans and high interest rates on deposits in digital currencies. Mashinsky positioned Celsius as an alternative to banks, benefiting users.
«Personally, I have more than $160 million in assets on Celsius right next to yours. If you have Bitcoin, I have Bitcoin next to yours, yielding exactly the same percentage. I earn 6%, you earn 6%. We do not treat anyone differently, regardless of the size of the deposit,» said Mashinsky.
By March 2021, Celsius managed digital assets worth over $10 billion. However, growth ceased in 2022. In April, Celsius announced the transfer of non-accredited investors' coins under custody, halting new deposits and rewards.
The situation worsened after the collapse of Terra Luna, which triggered a market sell-off and exacerbated liquidity issues at Celsius. In June, the company paused customer withdrawals and filed for bankruptcy in July. Court documents revealed a $1.2 billion hole in Celsius's balance sheet.
In September, Mashinsky stepped down as CEO. Financial documents filed by Celsius showed that he withdrew $10 million from the company in May 2022.
In July 2023, Mashinsky was charged with seven counts of fraud, conspiracy, and market manipulation, after which he was arrested. In December 2024, he pleaded guilty to two counts.
On May 8, 2025, he was sentenced to 12 years in prison. The court also ordered Mashinsky to pay $48.39 million in restitution.
«Alexander Mashinsky preyed on retail investors, promising to keep their digital assets safer than a bank, while in reality using those assets for risky bets and lining his own pockets. Ultimately, Mashinsky earned tens of millions of dollars while his clients lost billions,» said U.S. Attorney Jay Clayton.
The stories of these two figures demonstrate the other side of ambition in the digital currency industry. From luxurious penthouses to prison cells — the path is shorter than it seems for the darlings of fate at the peak of success.
Such stories should teach us something, but most people do not want to learn. In the financial world, it is important to avoid greed, as it often leads to mistakes, conflicts, and an inability to assess what one has, rather than wealth. Instead of striving for excessive enrichment, one should focus on creating sustainable sources of income, prudent financial management, and finding a balance between personal gain and value for others, which ultimately ensures financial stability.
