Sam Bankman-Fried asks for a lenient sentence, citing restitution from FTX

Sam Bankman-Fried’s lawyer urged a judge on Tuesday to impose a lenient sentence on the FTX founder’s conviction for stealing $8 billion (roughly Rs. 6,63,30 crore) from customers of the now-bankrupt cryptocurrency exchange, arguing that customers will get the most of their funds back.

In the sentencing submission, Bankman-Fried’s attorney Mark Mukasey told U.S. District Judge Louis Kaplan that a guideline range of between 5-1/4 and 6-1/2 years would be an appropriate prison term.

That’s far less than the maximum sentence of 110 years he faced after a jury found him guilty in November of seven counts of fraud and conspiracy in what prosecutors called one of the world’s largest financial frauds in American history.

Bankman-Fried has pleaded not guilty and is expected to appeal his conviction and sentence. He admitted that he made mistakes in managing FTX, but testified at trial that he never intended to steal customer funds.

Kaplan is due to sentence the former billionaire, who turns 32 next week, on March 28.

The attorney’s filing was accompanied by letters of support from Bankman-Fried’s parents, psychiatrist and others.

His parents, Stanford law professors Joseph Bankman and Barbara Freed, said their son was not interested in material wealth and worked hard to make clients healthy in the months between the November 2022 collapse of Bahamas-based FTX and his arrest on fraud charges a month later.

“Barbara and I … witnessed firsthand his single-minded focus on returning money to depositors, long after there was any possibility that he would be able to salvage any of his capital or wealth,” Bankman wrote.

Mukasey called a 100-year guideline range calculated by probation officials “barbaric,” saying it was based in part on a false claim that FTX customers had lost billions.

He pointed to the bankrupt company’s recent claim that it expects to repay all customers in full to support the argument that Bankman-Fried did not intend to steal.

“The sentence does not affect whether Sam intended to repay the money. He did it,” Mukasey wrote.

The probation officers’ calculation is not binding on Kaplan. The U.S. Attorney’s Office in Manhattan is expected to make its own sentencing recommendation by March 15.

Elizabeth Holmes or Michael Milken?

An MIT alumnus, Bankman-Fried has seen a boom in the values ​​of digital assets like Bitcoin to a net worth Forbes magazine once estimated at $26 billion (roughly Rs. 21.55.31 crores). Its fortunes evaporated in November 2022 when FTX declared bankruptcy following a wave of customer withdrawals.

During his month-long trial in federal court in Manhattan, three former close associates testified that Bankman-Fried ordered them to help loot FTX client funds to cover the losses of his Alameda Research hedge fund, even as he went public as a responsible steward in the volatile cryptocurrency market.

Prosecutors said Bankman-Fried also used client funds to buy luxury real estate in the Bahamas and to make donations to U.S. politicians who might support cryptocurrency-friendly regulations.

Bankman-Fried testified that he did not realize how much Alameda owed FTX until shortly before both failed.

Mukasey acknowledged that Bankman-Fried’s case has some similarities to that of Elizabeth Holmes, another young entrepreneur who was sentenced to 11 years in prison in 2022 for defrauding investors in her now-defunct blood-testing startup Theranos.

But he said Holmes was putting patients at risk and suggested Bankman-Fried had more in common with Michael Milken, a Wall Street financier in the 1980s known as the “junk king” who was released from prison after serving just two years into the original 10-year sentence on fraud charges.

“Given the same chance, Sam would have devoted his post-prison life to charitable causes,” Mukasey wrote.

Mother says she will change the place

Bankman-Fried has been jailed at the Metropolitan Detention Center in Brooklyn since August, when Kaplan revoked his bail after finding he may have tampered with witnesses.

In a letter to Kaplan, Bankman-Fried’s psychiatrist George Lerner wrote that he was on the autism spectrum. Mukasey wrote that Bankman-Fried struggles to make eye contact and communicate with others, which could make him vulnerable in a prison environment.

Bankman-Fried’s mother wrote that her son took responsibility for the mistakes that led to the collapse of FTX and was remorseful, but said she feared for his life in prison.

“His father and I face the very real possibility that we may not live long enough to see him released,” Freed wrote. “I’d gladly trade places with him if I could.”

© Thomson Reuters 2024