SBF Team Argues for 5 to 6 Years in Prison Citing FTX Clients’ Funds | Wilnesh News

While prosecutors asked FTX founder Sam Bankman-Fried to receive a sentence of 40 to 50 years in prison for his crimes, the defense team urged the judge to consider reducing the sentence by about 90%.

Bankman-Fried’s fate will be announced Thursday morning by Judge Louis Kaplan, who presided over the month-long trial in November. Bankman-Fried was found guilty of seven charges related to the collapse of cryptocurrency exchange FTX and the disappearance of approximately $10 billion in customer deposits.

The Bankman-Fried team’s hope is that Kaplan considers the increased likelihood that FTX clients will be able to recover most, if not all, of their lost funds should the exchange slide into bankruptcy in 2022.

Lawyers representing the FTX bankruptcy estate told a Delaware judge last month that they hope to fully repay customers and creditors through legal claims. Andrew Dietderich, a bankruptcy attorney working with FTX’s new leadership team, said there is “still a lot of work and risk” ahead to return all funds to customers, but the team has “a strategy to get there.”

This could be a huge change from the narrative surrounding FTX’s collapse 16 months ago. At the time, thousands of customers (reportedly as many as 1 million) were believed to have collectively lost billions of dollars, losses that would be irreversible due to the lax regulation and insecurity of the crypto industry. These clients face the real possibility that the vast majority of their funds will evaporate, just like other cases of hedge funds and lenders that failed during the so-called crypto winter of 2022.

The government’s successful case against Bankman-Fried relied in large part on convincing a jury that the defendant stole billions of dollars’ worth of FTX customer funds to make high-stakes bets at Alameda.

For months, new CEO John Ray III and his team of restructuring advisers have been chasing cash, luxury properties and cryptocurrency as FTX winds its way through Delaware bankruptcy court and Trace missing assets. They have raised more than $7 billion, not including $26 million in gifts and valuables such as property to Bankman-Fried’s parents or father. $700 million handed over to K5 Global and its founder Michael Kiveshe invested his FTX cash in companies like SpaceX, which have since grown in value.

Bankman-Fried’s defense team has asked the court for a sentence of 63 to 78 months in prison. Aside from the fact that it was his “first-time, non-violent offense,” the FTX founder’s lawyers relied heavily on the argument that Bankman-Fried’s risky bet paid off and the bankruptcy estate is expected to be repaid in full FTX client.

This is the story Bankman-Fried is trying to sell while he awaits trial.

“FTX US remains fully solvent,” Bankman-Fried wrote in a Substack post on January 12, 2023, he was under house arrest at his parents’ home in Palo Alto, California. He said the exchange “should be able to return all customers’ funds.”

An important asset in FTX’s portfolio is its stake in artificial intelligence startup Anthropic. Late last week, FTX’s bankruptcy estate reached an agreement with a consortium of buyers to sell a majority stake in Anthropic for $884 million. Under Bankman-Fried’s leadership, FTX invested $500 million in the startup ahead of the generative AI boom in 2021. In December 2023, the company’s valuation reached $18 billion, which would bring the roughly 8% stake in FTX to about $1.4 billion.

During Bankman-Fried’s trial, Kaplan rejected the defense’s request for permission to say FTX’s investment in Anthropic was a smart move.

Renato Mariotti, a former prosecutor in the U.S. Department of Justice’s Securities and Commodities Fraud Section, told CNBC that the more money the estate can recover for its clients, the better it is for Bankman-Fried.

“If true, it is relevant and the judge must consider victim restitution when sentencing,” Mariotti said. “But even if the victim was not harmed, he still committed the crime.”

Mariotti said he expected a sentence between what prosecutors and defense were seeking, predicting “at least 20 to 25 years.”

In addition to Anthropic’s gains, FTX clients can also watch the cryptocurrency’s rebound for signs of optimism. Bitcoin It trades at nearly $70,000, compared to less than $17,000 when FTX crashed.

In September, the bankruptcy team Status report posted FTX is shown to have $3.4 billion worth of digital assets, with more than $1.1 billion coming from its investments in cryptocurrencies Solana.inside The defense’s final letter to the court This month, lawyers noted a significant increase in the value of FTX’s Solana stake, saying that as of February 26, the property was worth An increase of about $4 billion in the past six months Thanks to the token’s appreciation.

Solana belongs to the so-called “Sam coin” category, which also includes Serum, a token created and promoted by FTX and Alameda. Solana has seen huge gains recently, rising more than eightfold since the end of September.

Meanwhile, FTX’s Bitcoin reserves, which were worth $560 million at the time of the September report when Bitcoin was trading around $25,000, have also seen significant gains. Since then, Bitcoin has increased in value by approximately 180%.

For FTX customers, getting full means receiving the equivalent of the cryptocurrency’s value in November 2022 in cash, according to the judge’s ruling. In other words, they did not see any benefit from investing in FTX and did not receive virtual currency that would allow them to cash out at a higher valuation.

Braden Perry, a former senior trial attorney at the Commodity Futures Trading Commission, told CNBC that based on Bankman-Fried’s basic level of criminality, number of victims, sophisticated tactics and leadership role, Bankman-Fried was Fried faces at least 70 months in prison – even if the victim suffered no monetary loss. Perry added that the huge losses initially expected meant a lifespan of just 30 years.