Federal prosecutors announced Friday that Sam (*40*)-Fried, the cryptocurrency tycoon convicted of orchestrating a multibillion-dollar fraud, should receive a prison sentence of 40 to 50 years.
Prosecutors made the recommendations in a lawsuit filed in U.S. District Court in Manhattan. (*40*)-Fried’s sentencing hearing is scheduled for March 28, when Judge Lewis A. Kaplan will determine his fate. He faces a maximum possible sentence of 110 years.
“Justice requires that he receive a prison sentence commensurate with the extraordinary dimensions of his crimes,” prosecutors said in a 116-page sentencing memo to the judge.
The federal probation department individually really useful a sentence of 100 years in prison for (*40*)-Fried, 32, which effectively means life in prison. But prosecutors said in the lawsuit that sending him to prison for the remainder of his life was not justified, despite the seriousness of his crime, due to his relative youth.
In a motion filed last month, (*40*)-Fried’s lawyers argued that he should receive a sentence of not than six and a half years.
A spokesman for (*40*)-Fried said Friday that his lawyer will submit a response to the federal government early next week.
Just 18 months ago, (*40*)-Fried was an influential cryptocurrency tycoon, the CEO of cryptocurrency exchange FTX, a $40 billion business empire. But then FTX collapsed virtually overnight, putting it in the crosshairs of law enforcement.
In November, a federal jury in Manhattan convicted (*40*)-Fried of stealing $8 billion from FTX customers to finance political contributions, investments in other corporations and lavish real estate purchases.
The implosion of FTX and (*40*)-Fried’s subsequent arrest and conviction were seen as a historic low point for the loosely regulated cryptocurrency world.
“The cryptocurrency industry may be new,” (*50*) Williams, U.S. attorney for the Southern District of New York, said after the decision, “but this type of fraud and this type of corruption is as old as time.”
The crypto industry has since appeared to put Mr. (*40*)-Fried’s crimes in the rearview mirror. As he prepares for the decision, prices of most digital assets have soared, with Bitcoin hitting record highs this month.
In Friday’s motion, prosecutors said a 40- to 50-year prison sentence was appropriate given the dimensions of the (*40*)-Frieda fraud and its impact on people all over the world, including those that invested a part of their pensions and life savings with FTX.
“The sheer scale of the Bankman-Fried fraud requires severe punishment,” prosecutors wrote. “The amount of loss – at least $10 billion – makes this one of the largest financial frauds of all time.”
According to prosecutors, if Mr. (*40*)-Fried receives a lenient sentence, there’s an actual risk that he’ll commit fraud in the longer term.
In their sentencing, prosecutors included several pages of customer messages sent to Mr. (*40*)-Fried on X (formerly Twitter) on the time of FTX’s collapse. In many posts, customers expressed anger at not having the ability to access their accounts.
Marc Mukasey, a lawyer hired by (*40*)-Fried to prepare the sentence, argued in legal papers that the 100-year prison sentence really useful by the probation office could be similar to the 150 years given to Bernard Madoff, who pleaded guilty in 2009. to run considered one of the most important Ponzi schemes in history. Any comparison between the 2 men is inappropriate, Mr. Mukasey said, given the “duration and dollar amount” involved in Mr. Madoff’s crimes – a 20-year fraud that generated $64 billion in losses on paper.
The probation officer’s suggestion was “barbaric” and “grotesque,” he said.
Mukasey also noted that it took a court-appointed trustee greater than 15 years to return roughly $14 billion to Madoff’s investors. And bankruptcy lawyers overseeing FTX’s liquidation suggested that clients of Mr. (*40*)-Fried’s failed stock exchange would likely get all their a refund in a comparatively short time.
In their filings, prosecutors said that even when FTX customers got most of their a refund, they might have to wait greater than two years to accomplish that. Prosecutors said this was “no comfort to victims who needed money in November 2022.”
In the lawsuit, prosecutors asked Judge Kaplan to order Mr. (*40*)-Fried to forfeit greater than $10 billion in losses and money stolen in consequence of the crime. Given the hundreds of thousands of potential victims and the complexity of calculating losses, prosecutors said any money transferred by Mr. (*40*)-Fried could possibly be distributed as a part of FTX’s bankruptcy.
Judges should not required to follow federal sentencing guidelines. In sentencing, Judge Kaplan may bear in mind many aspects, including Mr. (*40*)-Fried’s age, the undeniable fact that he’s a first-time offender and his potential for rehabilitation.
However, one factor that may fit against Mr. (*40*)-Fried is that he selected to testify at trial and at times appeared evasive during questioning. If Judge Kaplan finds that Mr. (*40*)-Fried testified falsely, he’ll have the option to take that into consideration when deciding his sentence.
In a column in The New York Law Journal this week, John S. Martin, a former federal judge in Manhattan, criticized the “irrationally long sentences” for many fraud and white-collar crimes. He said 100 years in prison had “no effect on crime rates.”
“Let’s be clear: Bankman-Fried deserves punishment,” 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.”
