Sam Bankman-Fried faces sentencing for multi-billion dollar FTX fraud

Sam Bankman-Fried, the former billionaire cryptocurrency prodigy, awaits sentencing on Thursday following his conviction for embezzling $8 billion from customers of the now-defunct FTX exchange, which he founded.

Publication: 28.03.2024 - 14:20
Sam Bankman-Fried faces sentencing for multi-billion dollar FTX fraud
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Bankman-Fried, aged 32, stares at the possibility of spending decades in prison after a jury found him guilty in November on seven counts of fraud and conspiracy. The sentencing proceedings are scheduled to commence at 9:30 a.m. EDT (1330 GMT) before U.S. District Judge Lewis Kaplan in Manhattan.

This hearing marks the zenith of Bankman-Fried's descent from an immensely wealthy cryptocurrency entrepreneur and significant political donor to the most prominent target yet in U.S. authorities' efforts to curb malpractice in digital asset markets.

While facing a statutory maximum sentence of 110 years, Bankman-Fried is likely to receive a lesser punishment. Prosecutors seek a prison term of 40 to 50 years for what they deem one of the most significant financial frauds in U.S. history.

"His recent life has been marked by unparalleled greed and hubris, ambition and justification, repeatedly risking and gambling with other people's funds," wrote the U.S. Attorney's office in Manhattan, which indicted Bankman-Fried in December 2022, in a sentencing memorandum dated March 15.

Bankman-Fried's defense attorney, Marc Mukasey, implored Judge Kaplan to impose a substantially shorter sentence, arguing that a term of less than 5-1/4 years would be fitting.

Mukasey contended that FTX customers would likely be fully compensated through the bankruptcy proceedings and highlighted Bankman-Fried's concerted efforts post-FTX's collapse in November 2022 to recover funds.

"The memorandum distorts reality to advance its preferred 'loss' narrative and portrays Sam as a villainous figure," Mukasey wrote in a court filing dated March 19, referring to the prosecutors' proposed sentence.

Numerous FTX customers have written to Judge Kaplan expressing disappointment that their compensation will be based on the value of their cryptocurrency at the time of FTX's bankruptcy, rather than current, higher market rates.

Bankman-Fried has pledged to appeal both his conviction and sentence.

'False Hope'

A graduate of the Massachusetts Institute of Technology, Bankman-Fried amassed a net worth of $26 billion, according to Forbes magazine, before turning 30, riding the wave of surging bitcoin and digital asset values.

Known for his unruly mop of curly hair and dedication to the effective altruism movement, Bankman-Fried advocated for talented young individuals to focus on earning and donating money to noble causes.

He emerged as one of the most significant contributors to Democratic candidates and initiatives ahead of the 2022 U.S. midterm elections. However, prosecutors allege that the responsible persona he projected concealed his embezzlement of customer funds over several years.

During the trial, three of his former close associates testified that he instructed them to utilize FTX customer funds to cover losses at his cryptocurrency-focused hedge fund, Alameda Research.

Bankman-Fried, in his defense, admitted to errors such as failing to establish a risk management team but denied any intention to defraud or misappropriate customers' funds.

In their sentencing memorandum, prosecutors expressed concerns that if released at a young age, Bankman-Fried could engage in fraudulent activities once more. They cited his post-FTX collapse writings, where he contemplated strategies for restoring his reputation, including denouncing the "woke agenda" or promoting the notion that "SBF died for our sins."

"It is plausible that he will adopt a narrative, endorse it, and persuade others to invest based on deceitful promises and false hope," prosecutors asserted.

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