Sam Bankman Freed: Disgraced “cryptocurrency king” to be sentenced

Former billionaire cryptocurrency boss Sam Bankman Fried, who was convicted last year of fraud and money laundering, is scheduled to return to a New York courtroom on Thursday to be sentenced.

It is certain that the 32-year-old will go to prison. What is unknown is for how long.

This moment has reignited debate over the extent of his crimes and what punishment he deserves.

His defense team is seeking a lenient punishment, but prosecutors are seeking a sentence of 40 to 50 years in prison.

They argue that a man who lied to investors and banks and stole billions of dollars in deposits from customers of the bankrupt cryptocurrency exchange FTX deserved such a sentence. ing.

His lawyers recommended a sentence of five to six-and-a-half years, accusing the government of adopting a “medieval approach to punishment” by insisting on long prison sentences for non-violent first-time offenders. did.

This question is the subject of hundreds of pages of letters from former FTX customers, family members, friends of his parents, and even strangers attempting to sway the federal judge who will decide his fate, Judge Lewis Kaplan. produced.

“He has shown no remorse, so why would the judge show mercy?” British investor Sunil Kavri held more than $2 million worth of shares at the time of the exchange's collapse. He said he was one of the people who mobilized former clients to share their experiences with the court.

FTX's collapse in 2022 was a stunning fall for Bankman Fried, who had become a billionaire and business celebrity promoting the company as a platform people could use to deposit and trade cryptocurrencies. Ta.

It attracted millions of customers until rumors of a financial crisis sparked a run on deposits.

In November 2023, a U.S. jury found that Bankman Freed had stolen billions of dollars in customer funds from the exchange prior to its collapse to be used for real estate purchases, political contributions, and other investments. .

Many of these customers now appear poised to recover large sums of money under plans being developed in separate bankruptcy cases.

Under the proposal, former customers would receive money based on the value of their assets at the time of the exchange's collapse.

In court filings, lawyers for Bankman-Freed, who plans to appeal the conviction, argue that such recovery merits a reduced sentence.

They said it proved that “money was always available.” [FTX’s] The assets had disappeared into Sam's personal pocket. ”

However, this repayment plan has infuriated many former customers as it means they will miss out on the ensuing crypto rebound.

John Ray, the lawyer who led FTX to bankruptcy and a critic of Bankman Freed, raised his concerns in his own letter to the court.

“Make no mistake about it: customers, non-governmental creditors, government creditors, and non-insider shareholders have suffered and continue to suffer,” he wrote in a letter to the court, saying that losses are minimal. It argued the claims were a sign that Bankman Freed continued to make profits. Living a “delusional life”.

Former FTX customers interviewed by the BBC said they were angry that their problems had been so casually ignored and called on the judge to reject their request for leniency.

“The people who are saying this are not in my position where I lost everything,” said Arsh Sehgal, a 38-year-old technology entrepreneur based in Barcelona who is an entrepreneur with his wife. He was one of the exchange's largest individual creditors, and had savings worth about $4 million in dollars and Bitcoin at FTX when it collapsed.

He is one of the clients suing over the current bankruptcy plan, which he said amounts to a “second crime” against Bankman Freed's clients.

Angela Chan, 36, a Vancouver resident who worked in software, said she had about $250,000 in dollars when FTX went bankrupt. She said she is concerned that the damage done to FTX customers is being downplayed because they are in the crypto industry.

“People feel sorry for this guy because they think cryptocurrencies are a crime…but I’m not a criminal,” she says, explaining how the company’s bankruptcy sent her into depression and how her credit card I explained how my debt had increased. . Facing her financial difficulties, she eventually sold some of her debt to investors.

Daniel Richman, a law professor at Columbia University, said the scale of a crime is rarely at issue as in this case.

But sentences are often shaped by other issues, such as the judge's own impression of the defendant and what is needed to deter further crimes, he said.

In this case, Judge Kaplan, a veteran of the court system who has presided over numerous high-profile trials involving public figures such as Donald Trump and actor Kevin Spacey, expressed skepticism about Bankman Fried's conduct. This has already been proven and the bail has been revoked. After it was revealed last year that he had tried to intimidate another witness.

“Every judge and every lawyer knows that one of the best things a defendant can do before he is sentenced is to show that he is on the right track, to show remorse and some sense of his guilt. “I would say it's about showing that,” says Professor Richman. He said.

“Here we have not only a defendant who was on trial, but a defendant who was, in fact, believed by at least the judge to be obstructive before trial,” Judge Kaplan said in his ruling. It's really amazing,” he added. It declares something like a defense claim.

Since the 1980s, the United States has significantly increased the length of official recommended sentences for white-collar criminals.

Judges frequently deviate from the guidelines, leading to wide variation, but “the risk of being harsh is greater than in most countries”, particularly in high-profile cases, Professor Richman said.

In her appeal to the judge, Bankman Fried's mother, retired law professor Barbara Fried, said the “punitive nature” of the U.S. judicial system was “an extreme outlier even in a democracy.” ”, he pointed out.

“I have no illusions about the redemptive power of prison,” she wrote. “Decades in prison would destroy Sam as surely as hanging.”