Thursday, April 18, 2024

Sentencing Day Nears for Sam Bankman-Fried in FTX Fraud Case.

Sam Bankman-Fried, a co-founder of FTX, will find out on Thursday how much time he will spend in prison after being found guilty of cheating lenders, investors, and customers.

The businessman who oversaw the biggest cryptocurrency crash in history could serve a maximum of 110 years. While Bankman-Fried’s attorneys recommended a sentence of six and a half years, the prosecution has demanded a sentence of forty to fifty years.

Lewis Kaplan, a federal judge in Manhattan who oversaw Bankman-trial Fried’s last autumn and faced the defendant multiple times during the process, will render the verdict.

Even before the trial started, Bankman-trial Fried’s bail was cancelled by Kaplan, and he was placed in jail. The court chastised Bankman-Fried on the stand several times during the trial for failing to provide direct answers to questions.

Numerous FTX victims have written to Kaplan, pleading with him to impose a severe punishment. Some of these victims even claimed they lost their life savings as a result of FTX’s downfall.

Bankman-Fried has presented his own argument for a lighter sentence, claiming in court filings that the prosecution’s portrayal of him as a “depraved super-villain” driven by luxury and material gain was an exaggeration of reality.

Rather, his attorneys contend in court documents that Bankman-Fried “eschews materialistic trappings” and is afflicted with a serious illness that results in a “near-complete absence of enjoyment, motivation, and interest.”

The attorneys continued by stating that Bankman-Fried has an autism spectrum condition diagnosis, which makes him occasionally value emotions differently than the overall impact when assessing risk.

On Thursday, Bankman-Fried will have one more opportunity to speak in court or make a final “allocution.”

White collar crime sentences have changed recently; for example, Elizabeth Holmes received an 11-year sentence while Bernard Madoff received a 150-year one.

Rise and fall

The former billionaire who oversaw the second-biggest cryptocurrency exchange globally and was the public face of a surge in digital assets in the early stages of the pandemic has seen a sharp decline, and his imprisonment brings his remarkable slide to an end.

When FTX filed for bankruptcy and was taken into custody by Bahamas authorities in late 2022, his empire fell apart.

The financial world was enthralled by his trial last autumn. Ultimately, a 12-member jury found in favour of the prosecution, which contended that Bankman-Fried, together with three of his top colleagues, had carried out a plot to steal up to $14 billion in customer deposits from his cryptocurrency exchange.

Prosecutors said that the organisation gave Bankman-Fried’s sibling cryptocurrency trading company Alameda Research “secret” backdoor access to FTX’s customer deposits and that it then used the funds for real estate, investments, loan repayments, and political contributions.

During the government’s closing argument, prosecutor Nicolas Roos claimed that the defendant had lied to his clients and wasted their money.

The other three FTX executives, Nishad Singh, the engineering director, FTX co-founder Gary Wang, and CEO of Alameda Caroline Ellison, entered plea deals with the prosecution, admitted guilt to fraud charges, and they all testified against Bankman-Fried.

Later in 2024, a sentence is anticipated to be handed down.

In his testimony, Bankman-Fried said that poor management choices and business judgements, not fraud, were to blame for his bitcoin exchange’s demise.

“Did you defraud anyone?” In the last days of the trial, Bankman-Fried was requested to take the stand by his attorney, Mark Cohen, in light of the defendant’s precarious gamble.

“No, I did not,” Bankman-Fried replied.

“The loss is sufficiently large in magnitude.”

Former federal prosecutor and white-collar criminal defence lawyer Martin Auerbach told Yahoo Finance in November that Bankman-Fried’s punishment will be difficult because “the magnitude of the loss is sufficiently great.”

The federal sentencing guidelines recommend prison term enhancements that prolong sentences as victims’ losses mount, but they are recommended rather than mandatory. According to Auerbach, one important component of white collar crimes is calculation.

In reference to the roughly $10 billion to $14 billion that prosecutors claim Bankman-Fried stole from his FTX customers, lenders, and creditors, Auerbach remarked, “He probably tops out on the charts.”

Judge Kaplan will have to balance the billions of dollars that Bankman-Fried risked against the possibility that people who suffered losses would receive full compensation, according to the company’s latest filings.

Attorneys for the now-defunct exchange informed a Delaware bankruptcy court judge in January that FTX could work out a plan to fully reimburse its customers and general unsecured creditors.

Bankman-Fried’s attorneys stated in a pre-sentencing brief that “the $8 billion figure for customers that the government uses does not reflect customer losses as of the bankruptcy petition date.”

It represents the brief lack of liquid assets to meet the extraordinary volume of withdrawal requests from customers starting on November 6, 2022, which on November 8, 2022, reached $4 billion daily.

Attorneys for Bankman-Fried contend that the prosecution misrepresented at trial that those client funds just disappeared.

Prosecutors have already chosen to spare Bankman-Fried from new charges, regardless of what occurs on Thursday.

They backed out of their plans to prosecute the entrepreneur on further counts.

The allegation is that he paid Chinese authorities and committed bank fraud.

Cryptured Team
Cryptured Team
The writers team at Cryptured.com is composed of passionate and experienced journalists who cover the latest developments in the crypto and blockchain space. They aim to provide accurate, unbiased and easy-to-understand news and information for their readers, as well as insights and analysis from industry experts. The writers team is always on the lookout for new and exciting stories that can help the general public learn more about the potential and challenges of these technologies.
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