Sam Bankman-Fried FTX scam victim claims lives have been destroyed

In a letter to the Department of Justice, an FTX client who lost $4 million when the exchange filed for bankruptcy in 2022 expressed disgust with the narrative circulating that the cryptocurrency exchange’s clients would ever get their a reimbursement.

“I reviewed the list of scheduled claims and calculated the exact amount stolen,” wrote a former FTX customer whose identity was withheld by the federal government. “Total customer liabilities are $19,722,911,002.84.”

This week’s letter landed on the desk of U.S. District Judge Lewis Kaplan, who on Thursday will inform FTX founder Sam Bankman-Fried of his prison sentence resulting from his involvement within the stock exchange collapse. At 9:30 a.m., the sentencing hearing will happen on the twenty sixth floor of the federal courthouse in downtown Manhattan, the identical location where in November, a jury found the previous cryptocurrency executive guilty of all seven criminal charges against him.

The victim, who wrote that she had 30 years of savings deposited at FTX three months before the stock market collapse, is an element of prosecutors’ last-minute attempts to persuade Judge Kaplan before sentencing.

“My whole life has been destroyed,” the person wrote. “I have two small children, one was born just before the fall. In addition to money, I lost happiness, the ability to get out of bed and the will to continue living. My wife is suicidal and depressed.”

The same stories were told through the month-long Bankman-Frieda criminal trial last 12 months. Prosecutors won the case by convincing jurors that Bankman-Fried stole no less than $8 billion from customers. For some, it meant financial disaster.

“In their verdict, the prosecutor’s office included the transfer of accounts of former FTX customers, which speaks to the devastation experienced by people losing money, the uncertainty of whether they will ever get it back, and dealing with the emotional consequences of being defrauded,” said Yesha Yadav, professor of law and associate dean at Vanderbilt University. “These victim impact statements can be very powerful.”

Bankman-Fried, 32, faces a maximum sentence of greater than 100 years in prison, although the federal government had suggested a sentence of 40 to 50 years. The defense has been fishing for not than 6.5 years.

For months, Judge Kaplan has been considering the suitable punishment for Bankman-Fried’s crimes within the implosion of his $32 billion crypto empire.

CNBC spoke to former federal prosecutors, trial lawyers and lawyers who defend white-collar criminals to get their tackle what to anticipate on Thursday.

Bankman-Fried was convicted of wire fraud and conspiracy to commit wire fraud against clients of FTX and lenders of sister hedge fund Alameda Research, in addition to conspiracy to commit securities fraud and conspiracy to commit commodity fraud against FTX investors, in addition to conspiracy to commit money laundering.

The defense team argued that Bankman-Fried’s sentence should reflect the opportunity of partial or full restitution to FTX customers. The likelihood of such a scenario has increased in recent months due to the rising value of cryptocurrencies and other assets held by FTX, akin to its stake in artificial intelligence startup Anthropic.

Even because the bankruptcy estate guarantees to repay customers, most of the hundreds of FTX victims say their cryptocurrency holdings have been significantly undervalued by the exchange’s latest management team.

“Much will be said about the loss at the time of the crime, not about its recovery or potential recovery once it is discovered,” said former federal and state prosecutor David Weinstein, who currently works as a company compliance and white collar defense attorney at Jones Walker. Weinstein said he expected a sentence of 30 to 40 years.

Mark Bini, a former state and federal prosecutor and assistant U.S. attorney specializing in financial crimes, expects a sentence of at least 30 years.

“During the suspension period, the guidelines are calculated to be 110 years,” said Bini, who currently represents cryptocurrency defendants through the law firm Reed Smith’s On a series digital resources team. “I think the judge will probably side with the suspension and the government on the amount of loss and the appropriate guidance.”

Judge Kaplan, 78, is a veteran of the Southern District of New York and presided a few of a very powerful cases pending in his court. During the defendant’s 4 days of interrogation, he showed no patience with Bankman-Frieda.

“Unfortunately for SBF, some of his testimony at trial turned out to be very evasive, somewhat cold and often contradictory,” Yadav said, adding that a 20- to 25-year prison sentence could give Judge Kaplan a method to balance the gravity of the crime with clients’ recognition of recoveries and the potential future rehabilitation.

Former federal prosecutor Neama Rahmani described Kaplan as “old school” and predicted a sentence of 20 to 30 years.

Tre LovellLos Angeles corporate lawyer, said the predominant aspects Kaplan will consider will probably be the scope of the fraud, in addition to the proven fact that Bankman-Fried apparently lied under oath without showing any remorse.

“The judge is not going to shorten the Bankman-Fried break just because FTX recovered a lot of money to compensate for the amounts lost by customers,” Lovell said. “The judge will simply look at Bankman-Fried’s conduct while he led the company, not what the company did after he stepped down as CEO.”

Bankman-Fried has one last probability to seem before a judge to point out remorse and promise to be a profit to society.

“If he says he has had a chance to reflect on what he has done, that he is very sorry for the misuse of investors’ hard-won funds, and that he wants to use his acumen in this area for the public good, he could walk away with a prison sentence south of 20 years.” Lovell said. “It’s never too late in court to say you’re sorry. But he won’t get a big discount on his sentence just because he shows remorse.”

TO WATCH: Prosecutors are recommending a 40-50 12 months prison sentence for Bankman-Fried