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© Reuters. FILE PHOTO: Sam Bankman-Fried, the founder of bankrupt cryptocurrency exchange FTX, arrives in court at a courthouse in New York, United States, on August 11, as lawyers push to convince the judge overseeing his fraud case not to let him to be sent to prison before trial. 2023. REPENTANCE
By Luc Cohen
NEW YORK (Reuters) – Sam Bankman-Fried’s lawyer urged a judge on Tuesday to impose a lenient sentence for the FTX founder’s conviction for stealing $8 billion from customers of the now-bankrupt cryptocurrency exchange, arguing that customers would get the majority of their money back.
Bankman-Fried’s attorney, Marc Mukasey, told U.S. District Judge Lewis Kaplan in his sentencing that a prison sentence of between 5 1/4 and 6 1/2 years was appropriate.
That’s far less than the maximum sentence of 110 years he faces after a jury found him guilty in November on seven counts of fraud and conspiracy in what prosecutors are calling one of the largest financial fraud cases in American history.
Bankman-Fried pleaded not guilty and is expected to appeal his conviction and sentence. He admitted to making mistakes in running FTX, but testified in court that he never intended to steal customer funds.
Kaplan is expected to sentence the former billionaire, who turns 32 next week, on March 28.
Attached to the attorney’s motion were letters of support from Bankman-Fried’s parents, a psychiatrist and others.
His parents, Stanford law professors Joseph Bankman and Barbara Fried, said their son was not interested in material wealth and struggled in the month between the collapse of Bahamas-based FTX in November 2022 and his arrest on fraud charges a month later worked to get customers back to health.
“Barbara and I … witnessed firsthand his single-minded focus on getting money back to depositors long after there was any possibility that he could save his equity or assets,” Bankman wrote.
Mukasey called the 100-year benchmark range calculated by probation officers “barbaric” and said it was based in part on a faulty claim that FTX’s customers had lost billions.
He pointed to the bankrupt company’s recent claim that it expected to pay all customers back in full to bolster the argument that Bankman-Fried did not intend to steal.
“The sentencing is not about whether Sam intended to pay the money back. That’s what he did,” Mukasey wrote.
The parole officer’s 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?
A graduate of the Massachusetts Institute of Technology, Bankman-Fried saw a boom in the values of digital assets like Bitcoin, with her fortune once valued at $26 billion, according to Forbes magazine. His fortune vanished in November 2022 when FTX filed for bankruptcy following a wave of customer withdrawals.
At his month-long trial in federal court in Manhattan, three former close associates testified that Bankman-Fried directed them to help loot FTX customer funds to cover the losses of his hedge fund Alameda Research, even though he publicly portrayed himself as a responsible steward cryptocurrency market presented to the volatile industry.
Prosecutors said Bankman-Fried also used client funds to buy luxury real estate in the Bahamas and donate to U.S. politicians who might support cryptocurrency-friendly regulations.
Bankman-Fried testified that he only realized how much Alameda owed FTX shortly before both companies failed.
Mukasey acknowledged that Bankman-Fried’s case bore some similarities to the case 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 who was known as the “junk bond king” and after Only released from prison for two years was sentenced to 10 years in prison for fraud charges.
“If Sam had the same chance, he would dedicate his life after prison to charity,” Mukasey wrote.
Mother says she will change location
Bankman-Fried has been incarcerated at the Metropolitan Detention Center in Brooklyn since August, when Kaplan revoked his bail after discovering he was likely witness tampering.
In a letter to Kaplan, Bankman-Fried’s psychiatrist George Lerner wrote that he was on the autism spectrum. Mukasey wrote that Bankman-Fried has difficulty making eye contact and communicating with others, which could make him vulnerable in a prison environment.
Bankman-Fried’s mother wrote that her son has taken responsibility for the mistakes that led to FTX’s collapse and is remorseful, but said she fears for his life in prison.
“His father and I face the very real possibility that we will not live long enough to see his release,” Fried wrote. “I would happily swap places with him if I could.”
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