(Kitco News) – Former FTX CEO Sam Bankman-Fried (SBF) was back in a Manhattan courthouse on Thursday to face sentencing for his November conviction on seven different fraud and conspiracy charges from his time operating the exchange, which declared bankruptcy in November 2022.
After successfully presenting their case, which laid out how SBF was personally responsible for FTX losing billions of customer and investor funds during its operation, prosecutors for the U.S. Department of Justice (DOJ) recommended that he be given 40 to 50 years behind bars.
They recommended a “severe penalty” due to the fact that FTX was once valued at $32 billion, but by the time SBF's fraudulent activities caught up with him, the exchange had essentially lost all its clients’ money.
His attorneys, on the other hand, requested no more than six and a half years in prison, citing his charitable activities and the fact that he never intended to hurt anyone.
According to a Presentence Investigation Report, which lays out sentencing recommendations for the crimes committed based on established guidelines, SBF should face 100 years in prison.
After considering the various requests and reviewing 52 victim impact statements submitted to the court by the DOJ, Judge Lewis Kaplan settled on a sentence of 25 years in prison.
In making his determination, Judge Kaplan said he “considered the guidelines and the 3553 factors.”
After a rundown of various facts about SBF, including that he “went to MIT,” is “extremely smart, and sufferers from autism,” and “had been exceptionally ambitious and aware of his talents,” Judge Kaplan also noted that “he wanted to be a hugely politically influential person in his country,” and not “just on the left end of the spectrum.”
“He set up a vehicle to make donations to the right, through straws that wouldn't come back to him,” he said. “Some of this, at one point, might have been attributed to him presenting himself as in favor of appropriate regulation of the crypto industry. In my judgment, that was an act. And he admitted it, ultimately. On November 15 or 16, he was interviewed by a reporter he knew well who said, ‘You said a lot of stuff about good regulations - was that just P.R. too?’ He replied, ‘Yeah, f*ck regulators.’”
“It was power and influence,” Judge Kaplan said. “Mr. Bankman-Fried knew that Alameda was spending customer funds on risky investments, political contributions, and Bahamas real estate. The funds were not his to use.”
“On general deterrence, at the end of the day, the criminal justice system thrives only if it's seen as fair. People need to feel it's fair, or we're back to trial by combat, folks, or something like it,” he said. “So the punishment must fit the seriousness of the crime. And this was a serious crime.”
“I know the Probation Department recommends 105 years, and the Government 40 to 50 years. That would be more than necessary,” Judge Kaplan said. “I am not diminishing the harm. The brazenness of his actions. His exceptional flexibility with the truth. His apparent lack of any remorse.”
“I want to add one further thought,” he said before announcing his final determination. “I did not think it a fruitful use of time to spell out every lie – when not lying, he was evasive, hair-splitting, trying to get the prosecutors to rephrase questions for him. I've been doing this job for close to 30 years. I've never seen a performance like that.”
“It is the judgment of the court that you are sentenced to 240 months then consecutive 60 [etc] for a total of 300 months [25 years],” Judge Kaplan concluded.
While 25 years in jail would be daunting for even hardened criminals, SBF was facing up to 1320 months in jail, leading some to say that Judge Kaplan was too lenient.
“25 years is too light. What Kaplan is missing is the victim statements from at least 3 people who committed suicide as a result of SBF’s crimes and stealing of customer funds. Missing because they’re dead,” said Terrence Yang, Managing Director at Swan Bitcoin and a Harvard Law JD, in a note shared with Kitco Crypto. “This doesn’t count his perjury, lying on the stand and evasiveness. Justice is not served. As Kaplan himself noted, many privileges to do good for the world instead of wreaking the havoc that it did.”
“The US legal system is not an ends justifies the means system,” he added. “As the judge himself noted, ‘A man willing to flip a coin as to the continued existence of life on earth. Mr. Bankman-Fried knew that Alameda was spending customer funds on risky investments, political contributions, and Bahamas real estate. The funds were not his to use.’”
“No sentence brings full justice to the FTX victims. Many of whom are upper middle class, middle class or even poor,” Yang said.
“The damage SBF did was permanent and severe. He ruined a lot of families and lives with his felonious acts and put salt in the deep wounds with his total lack of remorse,” he added. “I get that he has ADHD and ADHD families filed a statement with the court asking for leniency but SBF is the only person with ADHD in the world who stole billions of dollars in customer funds and destroyed or hurt millions of lives. Not just financially, but emotionally and spiritually.”
Yang suggested that in this instance, “Crime kinda pays. You can have all your subordinates testify against you, drive multiple people to suicide, steal customer funds, like on the stand, destroy many lives, and get a relatively light sentence.”
“Caroline Ellison and the folks who worked for SBF are lucky the prosecutors got enough evidence against SBF or they’d be the ones being sentenced today,” he said. “No one likes a snitch but if you are in a position where you know crimes are being committed, you should step forward and let prosecutors know because you could be next.”
If SBF serves his full sentence, he will have spent a little less than half of his life in prison once he is finally released. His lawyers, who are not the ones who represented him during the trial held in late 2023, are expected to appeal this conviction in the coming days.
