The defense’s report was supplemented with letters from Bankman-Fried’s relatives and various associates, testifying to his good character, remorse and utilitarian ideals. “The public perception of Sam could not be further from the truth,” wrote Barbara Fried, his mother. “Sending him to prison for decades will destroy Sam as surely as hanging him would, because it will take away everything in the world that gives his life meaning.”
Bankman-Fried’s counsel argued for a shorter sentence as FTX’s creditors are on track to fully recover their money at the end of the bankruptcy process – although not everyone is happy with the outdated asset valuation given the recent rapid rise in the price of crypto. They also dismissed the government’s claim that Bankman-Fried would reoffend if he returned to society too quickly as “a presumption on top of a hypothetical presumption on top of a presumption.” Bankman-Fried deserved no more than six and a half years in prison, his defense counsel argued.
The judge was unsympathetic. “There’s a risk that this guy will do something really bad in the future,” Kaplan said, addressing Bankman-Fried’s risk appetite. He described Bankman-Fried as a “math nerd” whose decision-making framework was guided primarily by “EV,” or expected value. “In other words, this is a man who is willing to flip a coin when it comes to the likelihood of life continuing on Earth. That’s the leitmotif of this whole thing,” he said.
The problem for Bankman-Fried is that he “can never put the toothpaste back in the tube,” said Paul Tuchmann, another former U.S. prosecutor and partner at law firm Wiggin and Dana. The fact that FTX users will receive refunds at an unspecified date in the future “doesn’t nearly undo the damage they’ve suffered in the intervening period,” he says. In a victim impact statement, one FTX customer said they had been living on ham, cheese, and ketchup sandwiches after the stock market crash. In anotherJohn Ray III, the restructuring professional who guided FTX through bankruptcy, wrote that clients “will never return to the same economic position they would have been in today without (Bankman-Fried’s) massive fraud” because the bankruptcy claims are not based on current crypto values.
The U.S. Department of Justice has taken these issues into account in its policies own attendance fileshighlighting the seriousness of Bankman-Fried’s crimes, the extent and number of his victims, and the way he obstructed the investigation by allegedly giving “false testimony” on the stand.
The government also underscored the need to deter would-be crypto fraudsters, suggesting that “some individuals have operated under the misconception that they are unregulated, subject to criminal law, or able to avoid scrutiny or significant prison sentences.” Until the fall of FTX, the DOJ had secured this some historical crypto beliefsdespite forming a specialized task force on crypto crime in 2021. But in sentencing Bankman-Fried, who had become an almost messianic figure in crypto, the judge could choose to “send a message” to the industry, Tuchmann says.
Now that the sentencing has been completed, Bankman-Fried will be returned to the temporary prison where he has been held since his arrest until the Federal Bureau of Prisons selects a permanent destination. The judge recommended that Bankman-Fried be housed in a low- to medium-security facility as close as possible to the San Francisco Bay Area, where his parents live. A decision will be made within a few months.
There is no possibility of parole in the federal system. The best Bankman-Fried can hope for – short of winning on appeal – is an early release for good behavior.
The DOJ has often compared the FTX founder to Ponzi fraudster Bernie Madoff, who received a 150-year prison sentence. But even the sentence sought by Bankman-Fried’s counsel feels long, Naftalis said, given the differences between the two cases. “This isn’t Madoff,” he says. “SBF was on top of crypto, but crypto is not Wall Street. Let’s remember that.”
In any facility, Bankman-Fried’s incarceration will be far from comfortable. “Just think about it,” says Naftalis. “A day in jail is a long time.”
This is a development story. Check back later for updates.