© Reuters. FILE PHOTO: Sam Bankman-Fried, the founder of bankrupt cryptocurrency exchange FTX, arrives in court as lawyers push to persuade the judge overseeing his fraud case not to jail him before trial, in a court in New York, USA, on August 11. 2023. REUSE
By Luc Cohen
NEW YORK (Reuters) – Sam Bankman-Fried's lawyer on Tuesday urged a judge to impose a lenient sentence for the FTX founder's conviction for stealing $8 billion from clients of the now-bankrupt cryptocurrency exchange, arguing that Clients would recover most of their funds.
In a sentencing presentation, Bankman-Fried's attorney, Marc Mukasey, told U.S. District Judge Lewis Kaplan that an appropriate prison sentence would range from 5-1/4 to 6-1/2 years.
That's far less than the maximum sentence of 110 years he faces after a jury found him guilty in November of seven counts of fraud and conspiracy, in what prosecutors have called one of the largest financial frauds in U.S. history. Joined.
Bankman-Fried has pleaded not guilty and is expected to appeal his conviction and sentence. He acknowledged making mistakes when running FTX, but testified at trial that he never intended to steal customer funds.
Kaplan will sentence the former billionaire, who will turn 32 next week, on March 28.
The attorney's presentation was accompanied by letters of support from Bankman-Fried's parents, psychiatrist and others.
His parents, Stanford law professors Joseph Bankman and Barbara Fried, said their son was not interested in material wealth and worked hard to win back clients in the month between the collapse of Bahamas-based FTX, in November 2022 and his arrest on fraud charges a month later.
“Barbara and I…witnessed firsthand his determination to return money to depositors, long after there was any possibility that he could save any of his capital or wealth,” Bankman wrote.
Mukasey called a 100-year guideline range calculated by parole agents “barbaric,” saying it was based in part on an erroneous claim that FTX clients lost billions.
He pointed to the bankrupt company's recent claim that it expected to pay all customers in full to support the argument that Bankman-Fried did not set out to steal.
“The conviction does not address whether Sam intended to return the money. He did,” 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?
Bankman-Fried, a graduate of the Massachusetts Institute of Technology, rode a boom in the values of digital assets like bitcoin to a net worth that Forbes magazine once estimated at $26 billion. His fortune evaporated in November 2022, when FTX filed for bankruptcy after a wave of customer withdrawals.
At her month-long trial in Manhattan federal court, three former close associates testified that Bankman-Fried ordered them to help loot FTX client funds to cover losses at her Alameda Research hedge fund, including while publicly presenting himself as a responsible manager in the volatile market. cryptocurrency market.
Prosecutors said Bankman-Fried also used client funds to purchase luxury real estate in the Bahamas and to donate to U.S. politicians who might support cryptocurrency-friendly regulations.
Bankman-Fried testified that she didn't realize how much Alameda owed FTX until shortly before they both failed.
Mukasey acknowledged that Bankman-Fried's case had 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 company, Theranos.
But he said Holmes put 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 bond king,” who was released from prison. after serving only two years of an initial sentence. 10-year sentence on fraud charges.
“Given the same opportunity, Sam would dedicate his life after prison to charity,” Mukasey wrote.
MOTHER SAYS SHE WOULD CHANGE LOCATION
Bankman-Fried has been incarcerated at the Brooklyn Metropolitan Detention Center since August, when Kaplan revoked his bail after discovering he likely tampered with witnesses.
In a letter to Kaplan, Bankman-Fried's psychiatrist, George Lerner, wrote that he is on the autism spectrum. Mukasey wrote that Bankman-Fried has trouble making eye contact and communicating with others, which could leave him vulnerable in a prison environment.
Bankman-Fried's mother wrote that her son had taken responsibility for the mistakes that led to FTX's collapse 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,” Fried wrote. “I would gladly trade places with him if I could.”
