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By Luc Cohen and Jody Godoy
NEW YORK (Reuters) -Sam Bankman-Fried lied on the witness stand at his fraud trial final 12 months when he mentioned he didn’t know that his hedge fund had spent buyer deposits taken from the FTX cryptocurrency alternate he based, a decide mentioned on the former billionaire cryptocurrency wunderkind’s sentencing listening to on Thursday.
Bankman-Fried, 32, faces the prospect of a long time behind bars over after a jury discovered him responsible on Nov. 2 on seven fraud and conspiracy counts stemming from FTX’s November 2022 collapse. Prosecutors have known as it one of many greatest monetary frauds in U.S. historical past.
U.S. District Choose Lewis Kaplan’s discovering on the outset of Thursday’s listening to that he dedicated perjury is a probably ominous signal for him.
Kaplan additionally mentioned he had discovered FTX prospects misplaced $8 billion, FTX’s fairness traders misplaced $1.7 billion, and that lenders to the Alameda Analysis hedge fund Bankman-Fried based misplaced $1.3 billion, rejecting Bankman-Fried’s argument that prospects could be paid again in full by way of the chapter course of.
“The defendant’s assertion that FTX prospects and collectors will probably be paid in full is deceptive, it’s logically flawed, it’s speculative,” Kaplan mentioned. “A thief who takes his loot to Las Vegas and efficiently bets the stolen cash will not be entitled to a reduction on the sentence through the use of his Las Vegas winnings to pay again what he stole.”
Kaplan has not but introduced the sentence, and the listening to might final hours.
The listening to marks the ultimate step in Bankman-Fried’s downfall from an ultra-wealthy cryptocurrency entrepreneur and main political donor to the largest trophy up to now in a crackdown by U.S. authorities on malfeasance in digital asset markets.
Bankman-Fried has vowed to enchantment his conviction and sentence.
He faces a statutory most of 110 years in jail, however will doubtless obtain much less. Prosecutors are searching for a jail sentence of 40 to 50 years.
“His life lately has been considered one of unmatched greed and hubris; of ambition and rationalization; and courting threat and playing repeatedly with different folks’s cash,” the U.S. Lawyer’s workplace in Manhattan, which charged Bankman-Fried in December 2022, wrote in a March 15 sentencing memorandum.
Protection lawyer Marc Mukasey has argued {that a} sentence of lower than 5-1/4 years could be applicable.
Mukasey mentioned FTX prospects would doubtless be made entire within the chapter course of, and that Bankman-Fried labored diligently after the alternate’s November 2022 collapse to get well funds.
“The memorandum distorts actuality to assist its treasured ‘loss’ narrative and casts Sam as a wicked super-villain,” Mukasey wrote in a March 19 courtroom submitting, referring to the prosecution’s sentencing proposal.
A number of FTX prospects have written to Kaplan expressing dismay that they are going to be compensated based mostly on the worth of their cryptocurrency on the time of FTX’s chapter, moderately than the upper ranges at which these property at present commerce.
A type of prospects, London resident Sunil Kavuri, mentioned at Bankman-Fried’s sentencing that he misplaced cash he needed to spend on a household residence and his kids’s schooling.
“Merely put, it is a steady lie that we’re all made entire,” Kavuri mentioned.
Bankman-Fried has been detained on the Metropolitan Detention Heart in Brooklyn since August 2023, when Kaplan revoked his bail after discovering he doubtless tampered with witnesses at the least twice.
Carrying a tan short-sleeve jail t-shirt, Bankman-Fried was led into the courtroom by members of the U.S. Marshals Service earlier than the listening to began. His mother and father, Stanford College regulation professors Joseph Bankman and Barbara Fried, arrived on the federal courthouse earlier.
‘PROMISE OF FALSE HOPE’
A Massachusetts Institute of Expertise graduate, Bankman-Fried rode a growth within the values of bitcoin and different digital property to a internet price of $26 billion, based on Forbes journal, earlier than he turned 30.
Bankman-Fried turned recognized for his mop of unkempt curly hair and dedication to a motion referred to as efficient altruism, which inspires proficient younger folks to give attention to incomes cash and giving it away to worthy causes.
He was one of many greatest contributors to Democratic candidates and causes forward of the 2022 U.S. midterm elections.
However prosecutors say the accountable picture he cultivated hid his years-long embezzlement of buyer funds.
At trial, three of his former shut associates testified that he directed them to make use of FTX buyer funds to plug losses at Alameda Analysis.
Bankman-Fried testified in his personal protection that he made errors similar to not implementing a threat administration workforce, however denied he supposed to defraud anybody or steal prospects’ cash.
Of their sentencing memorandum, prosecutors mentioned Bankman-Fried might commit fraud once more if launched at a younger age.
They pointed to his private writings within the weeks following FTX’s collapse, during which he mused about choices for restoring his picture similar to “come out in opposition to the woke agenda” or pushing the concept “SBF died for our sins.”
“It’s sensible that he’ll decide on a story, lean into it, and persuade different folks to half with their cash based mostly on lies and the promise of false hope,” prosecutors wrote.
(Reporting by Luc Cohen in New York; Modifying by Will Dunham, Noeleen Walder and Daniel Wallis)
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