Sam Bankman-Fried is going to jail for 25 years. His victims are moving on, but it isn't always easy.

By Frances Yue

'We forgave Sam a long time ago. We harbor no hate, we harbor no ill will.' Other FTX customers are still struggling to smile.

In the months after crypto exchange FTX filed for bankruptcy protection, Anthony Emtman thought he would have to shut down Ikigai Asset Management, the digital-asset hedge fund he started with his business partner, Travis Kling, in 2018 in California.

When FTX froze withdrawals in November 2022, about 85% to 90% of assets managed by Ikigai were stuck on the exchange. Emtman, Ikigai's chief executive, and Kling, the chief investment officer at Ikigai, faced hundreds of angry investors who were unable to redeem any money. Ikigai had to cut most of its employees. The two individuals were also the biggest investors in the fund.

It was "the worst day of my career and one of the worst days of my life," Kling wrote on X, formerly Twitter. While Emtman said he didn't fret much over the loss of money, he was pained by having to let go of the hedge fund's staff. "You feel responsible for putting a roof over their head and putting food on their table. I remember I was in New York at the time, being alone in my Airbnb, and just sobbing specifically over letting the team down," Emtman told MarketWatch in an interview.

For the first several months, things looked gloomy as the bankruptcy claims on FTX were trading for pennies on the dollar. But as 2023 went on, the situation gradually turned around. In December of last year, Ikigai sold $65 million of bankruptcy claims at a price Emtman and Kling "were happy with," Kling wrote on X. Ikigai declined to disclose the price they sold the claims for in the transaction. FTX bankruptcy claims traded at as high as over 70 cents on the dollar in December, according to data from Cherokee Acquisition. Ikigai also started to allow investors to redeem their money from the hedge fund, but an overwhelming majority of investors chose to stay with the funds, Emtman said in a phone interview. The firm is now fully back in business, according to Emtman.

Several individuals and companies heavily exposed to FTX's collapse, such as Ikigai, have moved on from the storm that hit them amid one of the biggest failures in the history of cryptocurrency. Others have struggled to put their lives back together. In January, the FTX bankruptcy estate said customers and creditors of the platform that can prove their losses will likely get back all of their money, as restructuring advisers have been tracking down assets and debts of the company and its affiliates. But others who got caught up in the Bankman-Fried debacle were seriously hurt, and are still struggling to move forward.

The expected FTX recovery is in part due to the rebound in crypto prices. Meanwhile, FTX's 8% stake in artificial-intelligence startup Anthropic, which it bought for $500 million in 2021, also appreciated significantly. The estate of FTX is selling about two-thirds of the 8% stake in Anthropic for $884 million, according to a court filing last Friday.

Digital-asset investors are also embracing another bull market, as bitcoin (BTCUSD) hit an all-time high at $73,798 earlier this month. The cryptocurrency recently changed hands for around $70,000, up over 350% from its cycle low at $15,480 reached in November 2022, after FTX collapsed.

Meanwhile, Sam Bankman-Fried, co-founder and former chief executive at FTX, was sentenced by a federal judge to 25 years in prison on Thursday. He was found guilty by a federal jury of seven felony counts of fraud and conspiracy in November, convicted of stealing billions in customer money.

Federal prosecutors had asked the federal judge to sentence Bankman-Fried to between 40 and 50 years in prison. They pointed to the serious emotional toll that the FTX debacle put many of its clients through, many of whom needed access to their funds in the weeks and months after the collapse, and that customers were not being made whole by any accounting. Some of those clients detailed in federal-court filings the serious life challenges they confronted due to Bankman-Fried's fraud.

Nevertheless, Bankman-Fried's lawyers had asked the judge to consider the extent of the recoveries FTX's customers and creditors have been experiencing and limit the jail sentence to no more than six and a half years.

"We forgave Sam a long time ago. We harbor no hate, we harbor no ill will," Ikigai CEO Emtman said. "We trust that the legal system will do what the legal system does, and it will do its job."

For Emtman, the past 17 months have been "coincidentally probably the most joyful period of my life," he said, as his career and crypto portfolio bottomed out, then bounced back. "Part of it is knowing where your value comes from, that I am not measured by my title and an organization. I am not measured by dollars in a bank account. I am measured by what's inside. Going through a massive failure like that and realizing, hey, I'm still breathing, I'm still smiling on the other side. It's like no, you can't take that from me," Emtman said.

Solana's comeback

Prominent cryptocurrencies that looked like they were finished have also made a stunning comeback. The Solana blockchain, for example, which took a significant hit after FTX's collapse, has made a dramatic turnaround.

For 10 to 12 months after FTX's failure, several venture-capital firms shunned investing in any projects on Solana, according to Austin Federa, head of strategy at the Solana Foundation, which supports the blockchain. For the year leading up to Bankman-Fried's trial, "there were a lot of questions about whether the Solana community and the Solana network would be able to survive and emerge from this strong, and there were a lot of people sort of sung the death song of the Solana ecosystem," Federa said. The Solana token lost about 80% of its value in less than two months after FTX collapsed, according to CoinDesk data.

Looking back, Federa said that the influence Bankman-Fried and FTX had on Solana was overstated. "There was this sort of assumption that they were heavily involved in the ecosystem or something like that, and that really isn't true," Federa said.

Bankman-Fried once invested in Solana, built decentralized crypto exchange Serum on the blockchain, and publicly vouched for the network. As a result, many players in the digital-asset world associated his name with Solana to some degree. (It seems Bankman-Fried remains a big fan of Solana, as he reportedly recommended prison guards buy the coin, according to a New York Times article in February.)

After the initial turbulence, the Solana network proved resilient - no projects left Solana to migrate to other blockchains after FTX collapsed, though some died during the bear market, according to Federa.

The Solana token posted a staggering return of over 770% over the past year, outperforming bitcoin and ether. The coin is recently trading around $184, still 29% away from its all-time high at $259 reached in November 2021, but it has the fifth biggest market capitalization in crypto.

Total value locked on Solana, which measures the total amount of assets locked or staked by users on the blockchain, now stands at around $4.6 billion, up from around $220 million at the beginning of 2023. It is still below its peak at $10 billion in November 2021, according to data from DefiLama.

For some crypto projects, the fallout from FTX provided an incentive for the people backing them to readjust their strategy.

Jack Lu, chief executive and co-founder at non-fungible-token marketplace Magic Eden, which was first built on Solana, said while his team stayed deeply invested in the ecosystem after FTX's collapse, they started to spend more time expanding to other blockchains, such as bitcoin. The move helped the team gain a leading position in bitcoin NFTs, Lu said. Magic Eden now holds about 93% market share of bitcoin NFTs, according to Lu.

New Ventures

Some former FTX employees were hit especially hard by the exchange's collapse, as they had personal money in the platform, according to people familiar with the matter. It may be particularly challenging for them to claw back that money, as the bankruptcy trustee may prioritize repaying customers, one of the people familiar said.

Still, former FTX employees are starting new chapters of their lives and even their own ventures. Brett Harrison, former president at FTX.US, resigned from the company in September 2022 - two months before its collapse - over disagreements with Bankman-Fried about management structure. He founded startup Architect Financial Technologies, a derivatives brokerage and trading technology firm, in January 2023. That was backed by a $5 million seed round from Coinbase Ventures, the venture-investment arm of Coinbase Global (COIN), Circle Ventures and Anthony Scaramucci, managing partner at alternative-asset firm SkyBridge, among others. In February, Architect Financial raised an additional $12 million.

Armani Ferrante, who had a stint at FTX's sister company, Alameda Research, teamed up with Tristan Yver and Can Sun, former employees at FTX, and in February they raised $17 million to build a crypto exchange called Backpack.

Both Architect Financial and Backpack have hired a number of former FTX employees.

Scaramucci, who suffered a reputational hit from once being close to Bankman-Fried, is also moving past the FTX debacle. "What Sam perpetrated was a betrayal to many people, including me, but I've moved on from it and I don't wish him poorly," Scaramucci said in a phone interview. "But I also don't feel any sense of vindication that he was found guilty."

Scaramucci's SkyBridge has seen its Legion fund rise by 27% this year as of Tuesday, largely driven by its exposure to digital assets, according to a person familiar with the matter. In July 2022, during the crypto bear market, the fund briefly suspended withdrawals, due to the fund's exposure to private investments, Scaramucci said.

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03-29-24 0920ET

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