Prosecutors are seeking a sentence of 40 to 50 years in prison for FTX founder Sam Bankman Freed, but the defense team is asking a judge to consider a sentence that would be about 90% shorter. I’m looking for it.
Bankman Fried’s fate will be announced Thursday morning in Manhattan by Judge Lewis Kaplan, who presided over a month-long trial in November. Bankman Fried was found guilty of seven charges related to the collapse of cryptocurrency exchange FTX and approximately $10 billion in missing customer deposits.
Bankman Fried’s team’s hope is that FTX customers have a growing chance of recovering most, if not all, of the funds they lost when the exchange fell into bankruptcy in 2022. This is something Kaplan takes into account.
Lawyers representing FTX’s bankruptcy estate told a Delaware judge last month that they expect to fully repay customers and creditors with legitimate claims. Andrew Diederich, a bankruptcy lawyer working with FTX’s new management team, said “there is still a great deal of work and risk left” to recover full amounts for customers, but that the team has “a strategy to achieve it.” ”.
This was a potentially dramatic shift in the narrative surrounding FTX’s collapse 16 months ago. At the time, thousands of customers (reportedly up to 1 million) collectively lost billions of dollars due to the crypto industry’s weak regulation and lack of security, with losses said to be irrecoverable. It was considered. These customers faced the real possibility that a large portion of their funds would have evaporated, similar to other cases of hedge funds and financiers that collapsed during the so-called crypto winter of 2022.
Much of the success of the government’s case against Bankman Freed depended on convincing a jury that the defendants stole billions of dollars’ worth of FTX customer funds to make risky bets in Alameda.
For months, new CEO John Ray III and his team of restructuring advisors have been working to recover cash, luxury real estate, cryptocurrencies and track down missing assets as FTX progresses through Delaware bankruptcy court. Ta. They have already raised more than $7 billion, which does not include valuables such as gifts to Bankman-Fried’s parents and $26 million in property. $700 million handed over to K5 Global and founder Michael Kivesinvested FTX’s cash in companies like SpaceX, which subsequently rose in value.
Bankman Freed’s attorneys asked the court for a sentence of 63 to 78 months. Beyond the fact that he is a “first-time non-violent offender,” the FTX founder’s lawyers say Bankman Fried’s risky bet paid off and the bankruptcy estate will fully repay FTX customers. It relies on the claim that it is a plan.
This is the story Bankman Freed was trying to sell while awaiting trial.
“FTX US remains fully solvent.” Bankman Freed wrote in a Substack post on January 12, 2023:, he was under house arrest at his parents’ home in Palo Alto, California. He said the exchange “should be able to return all customer funds.”
One of the key assets in FTX’s portfolio is its stake in artificial intelligence startup Anthropic. Late last week, FTX’s bankruptcy estate entered into a deal with a consortium of buyers to sell most of its holdings in Anthropic for $884 million. Under Bankman Fried’s leadership, FTX invested $500 million in the startup in 2021, before the generative AI boom. The company’s valuation will reach $18 billion in December 2023, making about 8% of FTX’s shares worth about $1.4 billion.
During Bankman Fried’s trial, Kaplan refused the defense’s request to be allowed to say that FTX’s investment in Anthropic was a wise bet.
“Still guilty.”
Renato Mariotti, a former prosecutor in the U.S. Justice Department’s Securities and Commodities Fraud Division, told CNBC that the more money the estate can recover for its clients, the better for Bankman Freed.
Mariotti said: “If true, that is important and the judge needs to consider compensation for the victim in sentencing.” “But even if no harm was caused to the victim, he still committed the crime.”
Mariotti said he expects the sentence to be somewhere in between what prosecutors and defense are seeking, “at least 20 to 25 years.”
On October 26, 2023, in a federal court in New York City, the son and former FTX CEO Sam Bankman Fried, who faces fraud charges in the collapse of a bankrupt virtual currency exchange, goes on trial. Mr. Joseph Bankman and Ms. Barbara Freed. .Â
Brendan McDiarmid | Reuters
In addition to Anthropic’s gains, FTX customers can find signs of optimism in the cryptocurrency’s recovery. Bitcoin is trading near $70,000, up from less than $17,000 at the time of FTX’s collapse.
Bankruptcy team in September We have released a status report It shows that FTX holds $3.4 billion worth of digital assets, of which over $1.1 billion comes from investments in cryptocurrencies. Solana.inside Defense letter to court filed last Lawyers noted that the value of FTX’s Solana stock had increased significantly and said the property had significantly increased in value as of February 26. Approximately $4 billion increase in last 6 months Thanks for the token thanks.
Solana fits into the so-called “thumb coin” category, a group that also includes Serum, a token created and promoted by FTX and Alameda. Solana has seen a significant rise recently, increasing more than eight times since the end of September.
Meanwhile, FTX’s Bitcoin stash was worth $560 million at the time of its September report, with the coin trading at around $25,000, which saw a similarly large increase. Since then, Bitcoin’s value has increased by about 180%.
According to the judge’s ruling, perfection for FTX customers means getting cash equivalent to the value of the cryptocurrency as of November 2022. In other words, they won’t see any upside of their FTX investment and won’t be given any virtual coins that they could cash out at a higher valuation.
Braden Perry, a former senior trial attorney at the Commodity Futures Trading Commission, told CNBC that Bankman Fried was at least 10 years old, given the basic level of the crime, the number of victims, the sophistication of its methods, and its leadership role. He said he could be sentenced to 70 months in prison. Provided there is no financial loss to the victim. Perry added that the huge losses originally expected suggested a life expectancy of 30 years.