Bankman-Fried prosecutors seek 40-to-50-year sentence
Lawyers want 6 for role in $10b crypto fraud
Federal prosecutors said Friday that Sam Bankman-Fried, the cryptocurrency mogul who was convicted of masterminding a multibillion-dollar fraud, should receive a prison sentence of 40 to 50 years.
The prosecutors outlined the recommendation in a filing in US District Court in Manhattan. Bankman-Fried’s sentencing hearing is scheduled for March 28, when Judge Lewis Kaplan will decide his fate. He faces a maximum possible penalty of 110 years.
“Justice requires that he receive a prison sentence commensurate with the extraordinary dimensions of his crimes,” the prosecutors said in a 116-page sentencing memo to the judge.
The federal probation department separately recommended a 100-year sentence for BankmanFried, 32, effectively a life sentence. But prosecutors said in the filing that sending him to prison for the rest of his life was not warranted, despite the severity of his crime, because of his relative youth.
In a filing last month, lawyers for Bankman-Fried argued that he should receive a sentence of no more than 6 1/2 years.
A spokesperson for Bankman-Fried said Friday that a lawyer for him will file a response to the government early next week.
Just 18 months ago, Bankman-Fried was a high-flying crypto mogul, presiding over cryptocurrency exchange FTX, a $40 billion business empire. But then FTX collapsed practically overnight, putting him in the crosshairs of law enforcement.
In November, a federal jury in Manhattan convicted Bankman-Fried of stealing $8 billion from FTX’s customers to finance political contributions, investments in other companies, and lavish real estate purchases. FTX’s implosion and BankmanFried’s subsequent arrest and conviction were seen as a historic nadir for the loosely regulated crypto world.
“The crypto industry might be new,” Damian Williams, the US attorney for the Southern District of New York, said after the verdict, “but this kind of fraud, this kind of corruption, is as old as time.”
Since then, the crypto industry appears to have put Bankman-Fried’s crimes in the rearview mirror. As he prepares for his sentencing, the prices of most digital assets have soared, with bitcoin reaching a record high this month.
Prosecutors said in Friday’s filing that a sentence of 40 to 50 years was appropriate, given the magnitude of Bankman-Fried’s fraud and its impact on people around the world, including those who had put some of their retirement money and life savings into FTX.
“The sheer scale of BankmanFried’s fraud calls for severe punishment,” prosecutors wrote. “The amount of loss — at least $10 billion — makes this one of the largest financial frauds of all time.”
If Bankman-Fried is given a light sentence, prosecutors said, there is a real risk that he’ll carry out some future fraud.
Marc Mukasey, the lawyer Bankman-Fried hired to prepare for the sentencing, argued in his legal filing that the 100-year sentence recommended by the probation department would be reminiscent of the 150 years given to Bernie Madoff, who pleaded guilty in 2009 to running one of the biggest Ponzi schemes in history. Any comparisons between the two men are inappropriate, Mukasey said, given “the duration and dollars” involved in Madoff ’s crimes — a 20-yearlong fraud that generated $64 billion in paper losses.
The probation department’s recommendation was “barbaric” and “grotesque,” he said.
Mukasey also pointed out that it took a court-appointed trustee more than 15 years to return roughly $14 billion to Madoff ’s investors. By contrast, the bankruptcy lawyers overseeing FTX’s unwinding have suggested that customers of BankmanFried’s failed exchange are likely to get back all of their money on a relatively fast timeline.