The trial against Sam Bankman-Fried for the failure of FTX is coming to an end: prosecutors have requested a sentence of 40 to 50 years in prison, and a fine of 11 billion dollars which includes the confiscation of assets.
FTX: Sam Bankman Fried and the 50-year prison sentence
In November SBF, co-founder and former CEO of the crypto exchange FTX, had been found guilty of seven different charges, including fraud and conspiracy.
Nevertheless, the public prosecutors did not request a record conviction.
For example, Bernie Madoff, former Chairman of Nasdaq, in 2009 was sentenced to a whopping 150 years in prison, for having created the largest Ponzi scheme of all time, worth about 65 billion dollars.
However, Madoff had 170 million dollars confiscated, while the prosecutors’ request against SBF would be for a fine and record confiscation of up to 11 billion dollars.
Sam Bankman-Fried is 32 years old, so if the judge were to opt for the maximum sentence requested by the prosecutors, he would leave prison at 82 years old, unless there are sentence reductions.
Madoff, for example, died in prison in 2021, at the age of 82, since when he was sentenced to 150 years in prison he was already 71 years old.
However, the judge has yet to rule on the conviction of SBF, which in the end could turn out to be lower or even higher than the requests of the PM.
Until now, however, it does not seem that the US judicial authorities have been particularly lenient towards SBF, who has been in prison for months.
His defenders had requested a sentence of only 6 years in prison.
The motivations
Emphasizing that the judge has already decided that SBF is guilty, the reasons given by the prosecutors for their requests are that he lied to investors, shared fake documents, and funneled millions of dollars in illegal donations into the US political system.
But they also added:
“Bankman-Fried deserves a severe sanction, proportionate to his role in this historic fraud. The government urges the court to impose a sentence that highlights the extraordinarily serious nature of the harm caused to thousands of victims; prevents the defendant from committing fraud again; and sends a strong signal to others who may be tempted to engage in financial misconduct that the consequences will be severe”.
To tell the truth, given the number of people scammed, and considering that FTX was spending for itself the money that actually belonged to its clients, it seems strange that a sentence three times lower than the one imposed on Madoff is considered a “severe sanction”.
However, it must also be said that the magnitude of the fraud by the former president of Nasdaq was larger, in economic terms.
However, if SBF were actually sentenced to spend almost the rest of his life in prison, it would certainly be at least a strong signal to anyone who wanted to try to imitate him.
Sam Bankman Fried and the FTX case: The fine in addition to years in prison
It is no coincidence that the requested fine, including confiscation, is very high: 11 billion dollars.
The PMs have nevertheless defined this as “a particularly prudent sum”, also adding that more than one billion dollars has actually already been seized.
They have also defined the contributions donated to US politicians by SBF and other FTX executives as “the biggest campaign financing crime ever occurred”.
Furthermore, they presented to the judge a 51-page confiscation order proposal, which contains a very long list of assets and properties to be confiscated.
Many of these assets are owned by the bankrupt Alameda Research, a subsidiary of the FTX group that was involved in trading and speculative investments.
SBF’s mistakes
According to the prosecutors, one of the most serious mistakes made by SBF was to continue defrauding FTX customers, knowing full well that it was illegal. They even hypothesize that he behaved as if he did not consider himself bound by the laws.
In short, a sort of self-proclamation, totally invented and incorrect, of being above the law.
SBF, on the other hand, had always defended himself in court by claiming that he had not fully realized that what he was doing was illegal, but on the other hand, the same prosecutors clearly stated that the former CEO of FTX had basically been lying for years, for example to his investors.
They also claim that he has corrupted some foreign government officials, painting a ruthless picture that leaves little room for interpretation.
Moreover, the judge, who has already found him guilty, seems to have fully supported the hypotheses of the public prosecutors, so it seems risky to imagine that he will now take another path.
After all, the fraud is quite evident even to those who have experienced the situation from the outside, and to those who have gathered all the information about it, it probably appears quite clear.
In such a scenario, it would not even be surprising if SBF had also stained itself by lying to its investors, corrupting public officials, and illegally financing politicians.