Federal prosecutors said Friday that Sam Bankman-Fried, the cryptocurrency tycoon convicted of masterminding a multibillion-dollar fraud, should be sentenced to 40 to 50 years in prison.
Prosecutors described the recommendation in a filing in U.S. District Court in Manhattan. Mr. Bankman-Fried’s sentencing hearing is scheduled for March 28, when Judge Lewis A. Kaplan will decide his fate. He faces a maximum sentence of 110 years.
“Justice demands that he be given a prison sentence commensurate with the extraordinary dimensions of his crimes,” prosecutors said in a 116-page sentencing brief to the judge.
The federal probation division separately recommended a 100-year sentence for Mr. Bankman-Fried, 32, effectively life in prison. But prosecutors said on the record that sending him to prison for the rest of his life was not warranted, despite the seriousness of his crime, because of his relative youth.
In a filing last month, Mr. Bankman-Fried’s lawyers argued that he should be sentenced to no more than six and a half years.
A spokesman for Mr. Bankman-Fried declined to comment Friday.
Just 18 months ago, Mr. Bankman-Fried was a cryptocurrency tycoon presiding over cryptocurrency exchange FTX, a $40 billion business empire. But then FTX collapsed almost overnight, putting him in the crosshairs of law enforcement.
In November, a federal jury in Manhattan convicted Mr. Bankman-Fried of stealing $8 billion from FTX clients to finance political contributions, investments in other companies and luxury real estate purchases.
The collapse of FTX and the subsequent arrest and conviction of Mr. Bankman-Fried was seen as a historic nadir for the loosely regulated world of cryptocurrencies.
“The crypto industry may be new,” Damian Williams, U.S. Attorney for the Southern District of New York, said after the verdict, “but this kind of fraud, this kind of corruption, is as old as time.” .
Since then, the crypto industry seems to have put Mr. Bankman-Fried’s crimes in the mirror. As he prepares for his sentencing, the prices of most digital assets have soared, with Bitcoin hitting a record high this month.
Prosecutors said in Friday’s filing that a sentence of 40 to 50 years was appropriate given the scale of Mr. Bankman-Fried’s fraud and its impact on people around the world, including those who had put away some of their retirement money. and their life savings in FTX.
“The sheer scale of Bankman-Fried’s fraud warrants severe punishment,” prosecutors wrote. “The amount of damage – at least $10 billion – makes this one of the biggest financial scams of all time.”
If Mr. Bankman-Fried is given a light sentence, prosecutors said, there is a real risk that he will commit some future fraud.
Marc Mukasey, the lawyer hired by Mr. Bankman-Fried to prepare for sentencing, argued in his legal filing that the 100-year sentence recommended by the probation department would be reminiscent of the 150 years given to Bernard Madoff, who pleaded guilty in 2009. to running one of the largest Ponzi schemes in history. Any comparisons between the two men are inappropriate, Mr. Mukasey said, given the “duration and dollars” involved in Mr. Madoff’s crimes – a 20-year fraud that caused $64 billion in losses on paper.
The watchdog’s recommendation was “barbaric” and “grotesque,” he said.
Mr. Mukasey also pointed out that it took more than 15 years for a court-appointed receiver to return about $14 billion to Mr. Madoff’s investors. By contrast, the bankruptcy lawyers overseeing the FTX liquidation have suggested that clients of Mr. Bankman-Fried’s failed exchange are likely to get all their money back on a relatively quick schedule.
Prosecutors said in their filing that even if FTX customers got most of their money back, they would have to wait more than two years for that to happen. Prosecutors said it “is of little comfort to those victims who needed the money in November 2022”.
Judges are not required to follow federal sentencing guidelines. And in imposing a sentence, Judge Kaplan may consider a number of factors, including Mr. Bankman-Fried’s age, the fact that he is a first-time offender and his potential for rehabilitation.
But one factor that may work against Mr. Bankman-Fried is that he chose to testify at his trial and appeared evasive at times during cross-examination. If Judge Kaplan concludes that Mr. Bankman-Fried testified falsely, he could take that into account when deciding the sentence.
In a column this week in The New York Law Journal, John S. Martin, a former federal judge in Manhattan, criticized the “unreasonably long sentences” for most fraud and white-collar crimes. He said the 100-year sentences had “no effect on crime rates”.
“Let me be clear, Bankman-Fried deserves to be punished,” Mr. Martin wrote. But he added, “Our extremely long prison sentences are one of the reasons the United States has the largest prison population in the world.”
