News
Sam Bankman-Fried: Disgraced ‘Crypto King’ must be convicted
- By Natalie Sherman
- Business journalist, New York
March 28, 2024
Sam Bankman-Fried, the billionaire former cryptocurrency kingpin convicted of fraud and money laundering last year, will return to court in New York on Thursday to be sentenced for his crimes.
It is certain that the 32-year-old will go to prison; what is not known is for how long.
The moment has revived debate about the extent of his crimes and what punishment might be appropriate.
His legal team has asked for leniency, but prosecutors are seeking 40 to 50 years in prison.
They say such a sentence is warranted for someone who lied to investors and banks and stole billions in deposits from customers of his now-bankrupt cryptocurrency exchange, FTX.
His defense team proposed five to 6.5 years, accusing the government of adopting “a medieval view of punishment” by insisting on a long period behind bars for a first-time nonviolent criminal.
The question has generated hundreds of pages of letters from former FTX clients, family members, friends of his parents – even complete strangers – trying to influence Judge Lewis Kaplan, the federal judge who will decide his fate.
“He has shown no remorse, so why should a judge show mercy?” said Sunil Kavuri, a British investor who had more than $2 million in holdings in the stock market when it collapsed, and one of the people who rallied former clients to share their experience with the court.
Image caption, Sunil Kavuri faces a long and uncertain wait to recoup some of his investment
FTX’s collapse in 2022 was a stunning fall for Bankman-Fried, who had become a billionaire and business celebrity by promoting the company, a platform people could use to deposit and trade cryptocurrencies.
It attracted millions of customers, before rumors of financial troubles sparked a rush on deposits.
In November 2023, a U.S. jury found Bankman-Fried he had stolen billions of client money from the stock exchange before the crash to buy property, make political donations and use it for other investments.
Many of these clients now appear poised to recover significant sums, under a plan developed in the separate bankruptcy case.
Under that proposal, former customers could have received money based on the value of their holdings at the time of the exchange’s collapse.
In documents submitted to court, Bankman-Fried’s defense team, which is expected to appeal her conviction, argued that such recovery merits a lighter sentence.
According to them, this proves that “money has always been available”, which “would be impossible if… [FTX’s] the assets had disappeared into Sam’s personal pockets.”
But the repayment plan has left many former customers outraged, as they will miss out on the cryptocurrency rebound that has occurred since then.
John Ray, the lawyer who drove FTX into bankruptcy and a critic of Bankman-Fried, highlighted the concerns in his letter to the court.
“Make no mistake; customers, non-government creditors, government creditors and lay shareholders have suffered and continue to suffer,” he wrote to the court, arguing that the minimum loss demands were a sign that Bankman-Fried was living on.” a life of illusion.”
Former FTX customers interviewed by the BBC said they were offended by the light-hearted dismissal of their problems and urged the judge to reject requests for leniency.
“The people who say this are not in the position I’m in, where you’ve lost everything,” said Arush Sehgal, a 38-year-old tech entrepreneur living in Barcelona who, with his wife, is one of them. of the exchange’s largest individual creditors, with about $4 million in dollar and bitcoin savings at FTX when it collapsed.
Image source, Arush Sehgal
He is one of the clients who filed suit against the current bankruptcy plan, which he says constitutes a “second crime” against Bankman-Fried’s clients.
Angela Chang, of Vancouver, a 36-year-old who worked in the software industry, said she had about $250,000 deposited in dollars at FTX when it collapsed. She said she feared the harm done to FTX customers was discounted because they were in the cryptocurrency industry.
“People think cryptocurrencies are a crime and so they feel sympathy for this guy… But I’m not a criminal,” she said, describing how the company’s collapse plunged her into depression and left her hoarding Credit card debt. Faced with a liquidity crisis, she eventually sold part of the credit to an investor.
Columbia law professor Daniel Richman said the scope of the crime has rarely been as contested as in this case.
But he said decisions are often influenced by other factors, including the judge’s impressions of the defendant and what it would take to deter him from further crimes.
In this case, Judge Kaplan, a veteran of the justice system who has presided over a number of high-profile trials involving public figures such as Donald Trump and actor Kevin Spacey, has already demonstrated that he is skeptical of Bankman’s actions -Fried, revoking his bail. last year after discovering that he was trying to intimidate other witnesses.
“Any judge or lawyer will tell you that one of the best things the defendant can do before he is sentenced is to really demonstrate that he is on the right track, show some remorse, and show some degree of self-knowledge regarding his crime “Professor Richman said. he said.
“Here we not only have a defendant who went to trial, but we have one who actually, at least according to the judge, stonewalled before the trial,” he said, adding that it would be “truly surprising” for Judge Kaplan to provide an answer sentence something similar to the defense request.
Since the 1980s, the United States has significantly increased the length of official prison sentence recommendations for white-collar criminals.
Although judges often deviate from the guidelines, introducing wide variability, “the risk of harshness is greater than in most countries” – particularly for high-profile cases, Professor Richman said.
In her appeal to the judge, Barbara Fried, Bankman-Fried’s mother and former law professor, highlighted the “punitive nature” of the American justice system “which makes us an extreme exception among democracies.”
“I have no illusions about the redemptive power of prisons,” he wrote. “Being consigned to prison for decades will destroy Sam as surely as he would hang him.”