Federal prosecutors said Friday that Sam Bankman-Fried, the cryptocurrency mogul convicted of plotting a multibillion-dollar fraud, should receive a prison sentence of 40 to 50 years.
Prosecutors outlined the recommendation in a filing with U.S. District Court in Manhattan. Mr. Bankman-Fried’s sentencing hearing is scheduled for March 28, when Judge Lewis A. Kaplan will decide his fate. He faces a maximum sentence of 110 years.
“Justice requires that he receive a prison sentence commensurate with the extraordinary magnitude of his crimes,” prosecutors said in a 116-page sentencing memo to the judge.
The federal parole board separately recommended a 100-year sentence for Mr. Bankman-Fried, 32, effectively a life sentence. But prosecutors said in the filing that despite the seriousness of his crime, his relatively young age did not justify sending him to prison for the rest of his life.
In a filing last month, Mr. Bankman-Fried’s lawyers argued that he should receive a maximum sentence of six and a half years.
A spokesman for Mr. Bankman-Fried said on Friday that a lawyer would file a response for him with the government early next week.
Just 18 months ago, Mr. Bankman-Fried was a high-flying crypto mogul, running the cryptocurrency exchange FTX, a $40 billion business empire. But then FTX collapsed virtually overnight and found itself in the crosshairs of law enforcement.
In November, a federal jury in Manhattan convicted Mr. Bankman-Fried of stealing $8 billion from FTX customers to finance political donations, investments in other companies and lavish real estate purchases.
The implosion of FTX and the subsequent arrest and conviction of Mr. Bankman-Fried were considered a historic low point for the loosely regulated crypto world.
“The crypto industry may be new,” Damian Williams, the U.S. attorney for the Southern District of New York, said after the ruling, “but this type of fraud, this type of corruption is as old as time.”
Since then, the crypto industry appears to have turned a blind eye to Mr. Bankman-Fried’s crimes. As he prepares to be sentenced, prices of most digital assets have skyrocketed, with Bitcoin hitting a record high this month.
Prosecutors said in Friday’s filing that a sentence of 40 to 50 years was appropriate given the scale of Mr. Bankman-Fried’s fraud and its impact on people around the world, including those who invested some of their retirement money and life savings FTX.
“The sheer magnitude of the Bankman Fried fraud requires severe punishment,” prosecutors wrote. “The size of the loss – at least $10 billion – makes this case one of the largest financial fraud cases of all time.”
If Mr. Bankman-Fried is given a lenient sentence, prosecutors say there is a real risk that he will commit some kind of fraud in the future.
In the sentencing submission, prosecutors included several pages of customer messages sent to Mr. Bankman-Fried on X, formerly Twitter, at the time of FTX’s collapse. In many posts, customers expressed their dissatisfaction with not being able to access their accounts.
Marc Mukasey, the lawyer Mr. Bankman-Fried hired to prepare the sentencing, argued in his court filing that the 100-year prison sentence recommended by the parole board would be reminiscent of the 150 years given to Bernard Madoff, who pleaded guilty in 2009 pleaded guilty to running one of the largest Ponzi schemes in history. Any comparisons between the two men would be inappropriate, Mr. Mukasey said, given the “length and dollars” involved in Mr. Madoff’s crimes – a 20-year-long fraud that caused $64 billion in paper losses.
The parole board’s recommendation was “barbaric” and “grotesque,” he said.
Mr. Mukasey also noted that it took more than 15 years for a court-appointed trustee to return about $14 billion to Mr. Madoff’s investors. In contrast, the bankruptcy lawyers overseeing FTX’s unwinding have indicated that customers of Mr. Bankman-Fried’s failed exchange are likely to get all their money back relatively quickly.
Prosecutors said in their filing that even if FTX customers got most of their money back, they would have had to wait more than two years for it. Prosecutors said that was “no consolation to the victims who needed the money in November 2022.”
In the filing, prosecutors asked Judge Kaplan to also order Mr. Bankman-Fried to forfeit more than $10 billion, representing losses and stolen money from his crime. Given the millions of potential victims and the complexity of calculating losses, prosecutors said the money paid by Mr. Bankman-Fried would best be distributed as part of the FTX bankruptcy.
Judges are not required to follow federal sentencing guidelines. And in imposing a sentence, Judge Kaplan may consider a number of factors, including Mr. Bankman-Fried’s age, the fact that he is a first-time offender and the possibility of his rehabilitation.
But one factor that could work against Mr. Bankman-Fried is that he chose to testify at his trial and that he appeared evasive at times under cross-examination. If Judge Kaplan concludes that Mr. Bankman-Fried made a false statement, he could take that into account when making his sentence.
In a column in the New York Law Journal, John S. Martin, a former federal judge in Manhattan, criticized “irrationally long sentences” for most fraud and white-collar crimes. He said 100-year prison sentences had had “no impact on crime rates.”
“Let me be clear that Bankman-Fried deserves punishment,” Mr. Martin wrote. But he added: “Our extremely long sentences are one of the reasons the United States has the largest prison population in the world.”
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2024-03-16 14:55:24
www.nytimes.com
