Sam Bankman Fried will be sentenced on Thursday, four months after he was found guilty of orchestrating a multibillion-dollar fraud that caused the collapse of the FTX cryptocurrency exchange. .
A federal jury in New York City convicted Bankman Fried, 32, of two counts of fraud and five counts of conspiracy in November. Since then, he has been incarcerated at Brooklyn's Metropolitan Detention Center, where his bail was revoked on charges of witness tampering.
Federal prosecutors are seeking the maximum sentence of 50 years out of the statutory 110-year sentence specified in the conviction. John Coffee, a professor at Columbia Law School who specializes in white-collar criminal defense, said Mr. Bankman-Fried apparently has no criminal history, and prosecutors rarely seek the maximum legal amount.
However, considering the nature of the fraud, Bankman Freed's comfortable upbringing, and the magnitude of the victim's loss, prosecutors still called for an aggressive sentence.
“In every aspect of his work, and with respect to each crime he committed, the defendant demonstrated a brazen disregard for the rule of law,” prosecutors wrote. “He understood the rules, but decided they didn't apply to him. He knew what society considered to be illegal and unethical, but the defendant's own We ignored it based on a pernicious delusion of grandeur driven by values and a sense of superiority.”
Prosecutors said Bankman Fried “was aware of his customers' expectations that his money would be kept safe, but he held his clients' money safe based on his callous belief that he could put their money to better use.” “I ignored it,” he said.
Bankman Freed's defense team is seeking a sentence of no more than six and a half years. In a 98-page motion for extenuating circumstances, they cited Bankman-Freed's mental health issues, selflessness in his private life and security risks he faces in prison.
They also argued that FTX's victims ultimately suffered no losses, a notion that is pushed back by the exchange's current director, John Wray.
“There are many things we have not been able to recover, such as bribes to Chinese officials, hundreds of millions of dollars spent to buy access and time with celebrities and politicians, or investments that we grossly overpaid without any effort. Yes,” Ray wrote in a March 20 memo. “The damage was enormous. I have no remorse.”
Bitcoin prices are starting to soar again, but FTX victims are only entitled to recover their crypto assets at the prices observed when the exchange filed for bankruptcy.
Bankman-Freed's consistent lack of remorse throughout the trial will likely weigh heavily on U.S. District Judge Lewis Kaplan's decision, Coffee said.
Bankman Freed “holds the line that we sympathize with the victims and want to help them get their money back. It's not going to work,” Coffee said. “He has to find a way to tread a cautious path, to express some contrition without abandoning his appeal. Otherwise, the judge will say, 'This man is sticking with me. I’m just here.’”
Another Bureau of Prisons official will decide where Bankman-Fried will ultimately serve his sentence. Although the federal case does not allow for the possibility of parole, Coffee said Bankman-Freed could ultimately have his term reduced by several years if he is found to be of good behavior. .
But that's unlikely to result in significant reductions, Coffee said.
“He's facing real time,” he said.
