Sam Bankman-Fried might see his 25-year sentence halved
Sam Bankman-Fried, the founder of the failed cryptocurrency exchange FTX, was sentenced to 25 years in federal prison by a Manhattan court on Thursday. This comes after he was convicted of defrauding customers and investors, with Judge Lewis Kaplan highlighting the potential future risks posed by Bankman-Fried.
The sentence is approximately half of what was initially sought by prosecutors, but still ranks high among prominent white-collar fraud cases. Comparatively, Bernard Madoff received a 150-year sentence for a Ponzi scheme, while Theranos founder Elizabeth Holmes was sentenced to just over 11 years.
Despite there being no parole in federal cases, Bankman-Fried could reduce his sentence to as low as 12.5 years through the First Step Act, which allows for sentence reduction for nonviolent federal inmates. Although the legislation was initially aimed at reducing prison time for minority offenders, it has notably benefited white-collar criminals as well.
Furthermore, Judge Kaplan ordered Bankman-Fried to forfeit $11.02 billion, a sum that will likely include all of his available assets. Despite the vast number of victims involved, no restitution will be pursued due to practicality concerns.
The court has recommended that Bankman-Fried be placed in a medium-security facility or any lower-security facility deemed suitable, preferably close to the San Francisco area to facilitate family visits. Following the sentencing, Bankman-Fried’s parents expressed their heartbreak and determination to continue fighting for their son.
Experts and industry react
Dan Held of Asymmetric said he views the sentence as not long enough, considering the actions and damage caused by Bankman-Fried. The FTX collapse created an $8 billion deficit, with the estate striving for full recovery in dollar terms, despite crypto term losses for many creditors.
Michael Silberberg, Head of Investor Relations at crypto hedge fund Alt Tab Capital commented. “We are focused on the crypto market, and this trial is the conclusion of a sorry episode that the market has moved on from. Enron was not a demonstration that all energy markets were fraudulent, nor was Madoff an indicator of all hedge funds. We believe in the crypto market’s robustness and support the prosecution of bad actors. We remain focused on the compensation for defrauded investors and how that will impact the market when resolved.”
The sentence has also drawn comparisons with other high-profile legal cases within and outside the cryptocurrency world. Jake Chervinsky of Variant Fund and Nic Carter of Castle Island Ventures noted the disparity between Bankman-Fried’s sentence and that of Ross Ulbricht of Silk Road, who received a much harsher penalty.
The ongoing trial of Alexey Pertsev over Tornado Cash also entered the conversation, with some community members highlighting the perceived injustice in the sentencing disparities.
