Tag: cryptocurrency

Sam Bankman-Fried will learn his sentence Thursday, four months after he was found guilty of orchestrating the multibillion-dollar fraud that prompted the collapse of the FTX cryptocurrency exchange.

Bankman-Fried, 32, was convicted in November by a jury on each of the two counts of fraud and five counts of conspiracy he was facing. He has been jailed at the Metropolitan Detention Center facility in Brooklyn ever since, with his bail having been revoked over witness-tampering allegations.

Federal prosecutors are seeking as much as 50 years of the statutory 110-year sentence implied by the conviction. Bankman-Fried apparently lacks a criminal history, and prosecutors rarely seek the statutory maximum, said John Coffee, a professor at Columbia University Law School specializing in white-collar criminal defense.

But the nature of the fraud; Bankman-Fried’s comfortable upbringing; and the scale of losses to victims led prosecutors to nevertheless seek an aggressive sentence.

“In every part of his business, and with respect to each crime committed, the defendant demonstrated a brazen disrespect for the rule of law,” the prosecutors wrote. “He understood the rules, but decided they did not apply to him. He knew what society deemed illegal and unethical, but disregarded that based on a pernicious megalomania guided by the defendant’s own values and sense of superiority.”

The prosecutors said Bankman-Fried “knew his customers’ expectations — that he would hold their money safe — but he disregarded them based on a callous belief that he could put their money to better use.

Bankman-Fried’s defense team is asking for 6 1/2 years or less. In a 98-page filing pleading for leniency, they cited Bankman-Fried’s mental health struggles, his purported selflessness in his personal life, and the safety risks he faces in prison.

They also argued FTX victims did not end up suffering losses — a notion on which the exchange’s current overseer, John Ray, has pushed back.

“There are plenty of things we did not get back, like the bribes to Chinese officials or the hundreds of millions of dollars he spent to buy access to or time with celebrities or politicians or investments for which he grossly overpaid having done zero diligence,” Ray wrote in a March 20 memo. “The harm was vast. The remorse is nonexistent.”

While the price of bitcoin has begun to surge again, FTX victims are only entitled to recover crypto assets at the prices observed when the exchange filed for bankruptcy.

Bankman-Fried’s consistent lack of remorse throughout the trial is likely to weigh on the sentence Judge Lewis Kaplan hands down, Coffee said.

“[Bankman-Fried has] held to the line that he sympathizes with the victims, and wants to help them get their money back. That’s not going to work,” Coffee said. “He’s got to find a way to walk a careful line, without abandoning his appeal, to express some contrition. Otherwise the judge is going to say: ‘This guy’s just sticking it to me.”

A separate Bureau of Prisons official will decide where Bankman-Fried ends up serving his sentence. Federal cases do not allow the possibility of parole, but Coffee said Bankman-Fried may end up seeing some years shaved off his term for good behavior.

But it’s unlikely to add up to much of a reduction, Coffee said.

“He’s facing real time,” he said.