Following a month-long trial culminating in approximately four hours of deliberation, last week saw FTX founder Sam Bankman-Fried convicted on seven counts of fraud and conspiracy. Embezzling billions from his cryptocurrency exchange’s customers and investors, diverting funds into personal investments, and lavish expenditures formed the basis of the charges.
Now, the responsibility falls on Judge Lewis Kaplan of the Southern District of New York to determine the potential prison term for Bankman-Fried, prompting age-old deliberations on the fitting punishment for economic crimes.
Despite a maximum sentence exceeding 100 years for the 31-year-old, who will turn 32 in March, federal sentencing guidelines, designed to maintain consistency across courts nationwide, introduce an element of flexibility. Variables such as the severity of the offense, the convicted individual’s cooperation, and the judge’s inclinations can significantly influence sentences for similar crimes.
Crypto legal expert David Lesperance told CCN that Bankman-Fried might plead guilty, and that might well minimize his possible sentence.
“But you know, we’re all speculating. It’s all going to be what Kaplan gives. And remember, the prosecution is going to say: ‘Judge we were recommending this and this’ but it’s ultimately up to Kaplan,” he stated.
Lesperance added b that, given the fact that “the judge withdrew pre trial release, the size of the fraud, multiple convictions, lack of obvious grounds of appeal, and extreme flight risk the chances that SBF will be granted pre sentencing release – are not great!”
John Coffee, a Columbia University law professor and an expert on white-collar crime, explained that the economic crimes committed by S.B.F. might rank second in severity only to Bernie Madoff’s, justifying a substantial sentence, although he criticized Madoff’s sentence as impractical given his advanced age.
The professor indicated that Bankman-Fried could potentially face a 50-year sentence, considering his age, the nature of his offenses, and the media scrutiny surrounding his punishment. However, he anticipated a probable sentence of 20 years or more, noting that Judge Kaplan is recognized for being “very fair” but not excessively lenient.
Coffee agrees with Jennifer Taub of Western New England University’s law school, who said that Bankman-Fried might receive a sentence of approximately 25 years, with the potential for earlier release based on good behavior.
Taub highlighted that the maximum sentences stipulated in the guidelines often do not align with the actual outcomes in many cases, although the intimidating prospects can prompt defendants to negotiate deals with the government. Notably, Bankman-Fried’s former colleagues at FTX and its affiliate, Alameda Research, who pleaded guilty and cooperated as witnesses against him, may face minimal or no prison time.
She further explained that financial wrongdoers are also accountable for fines and restitution to compensate victims, implying that extended incarceration may not necessarily achieve justice. Given Bankman-Fried’s renowned preoccupation with risk calculation, an impactful sentence would convey to individuals of similar inclination that taking such risks is not a worthwhile endeavor.
The fact is, Sam Bankman-Fried had a penchant for risk and a love for gambling. Recognizing that going to trial held a slim possibility of walking away without consequences, he opted to plead guilty, ensuring a certain punishment and likely incarceration.