The defense’s court filing was supplemented with letters from Bankman-Fried’s family members and various associates, testifying to his good character, remorse, and utilitarian ideals. “The public perception of Sam could not be further from the truth,” wrote Barbara Fried, his mother. “Being consigned to prison for decades will destroy Sam as surely as would hanging him, because it will take away everything in the world that gives his life meaning.”
Bankman-Fried’s counsel argued for a shorter sentence given that FTX creditors are on track to recover their money in full at the end of the bankruptcy process—although not everyone’s happy with the outdated valuation of the assets, given crypto’s recent meteoric rise in price. They also dismissed the government’s claim that Bankman-Fried would reoffend if allowed to reenter society too quickly as “conjecture on top of hypothetical on top of supposition.” Bankman-Fried deserved no more than six-and-a-half years in prison, his counsel claimed.
The judge was unsympathetic. “There is a risk this man will do something very bad in the future,” Kaplan said, homing in on Bankman-Fried’s appetite for risk. He described Bankman-Fried as a “math nerd” whose decision-making framework was guided primarily by “EV,” or expected value. “In other words, this is a man willing to flip a coin as to the chance of life’s continued existence on Earth. That’s a leitmotif of this entire case,” he said.
The problem for Bankman-Fried is that he can “never put the toothpaste back in the tube,” says Paul Tuchmann, another former US prosecutor and partner at law firm Wiggin and Dana. The fact that FTX users are set to recover money at an unspecified future date “does not nearly undo the harm they suffered” in the intervening period, he says. In one victim impact statement, an FTX customer said they had subsisted on ham, cheese, and ketchup sandwiches after the exchange’s collapse. In another, John Ray III, the restructuring professional steering FTX through bankruptcy, wrote that customers “will never be returned to the same economic position they would have been in today absent [Bankman-Fried’s] colossal fraud,” because the bankruptcy claims aren’t based on current crypto values.
The US Department of Justice made play of these issues in its own presentence filings, pressing home the gravity of Bankman-Fried’s crimes, the range and number of his victims, and the way he obstructed the investigation by allegedly giving “false testimony” on the stand.
The government also underlined the need to deter would-be crypto fraudsters, suggesting that “some individuals have operated under the misimpression that they are unregulated, not subject to criminal laws, or can avoid scrutiny or significant jail time.” Until the fall of FTX, the DOJ had secured few landmark crypto convictions, despite forming a specialist crypto-crime task force in 2021. But in sentencing Bankman-Fried, who had become an almost messianic figure in crypto, the judge could elect to “send a message” to the industry, says Tuchmann.
With sentencing complete, Bankman-Fried will be returned to the temporary holding facility in which he has been kept since his arrest, until the Federal Bureau of Prisons selects a permanent destination. The judge recommended Bankman-Fried be housed in a low-to-medium-security facility as close as possible to the San Francisco Bay Area, where his parents reside. A decision will be reached within the next few months.
In the federal system, there is no possibility of parole. The best Bankman-Fried can hope for—short of winning on appeal—is early release for good behavior.
The DOJ has frequently compared the FTX founder to Ponzi fraudster Bernie Madoff, who received a prison sentence of 150 years. But even the sentence requested by Bankman-Fried’s counsel feels long, says Naftalis, given the differences between the two cases. “This isn’t Madoff,” he says. “SBF was on top of crypto, but crypto is not Wall Street. Let’s remember that.”
In whatever facility, Bankman-Fried’s incarceration will be far from comfortable. “Just think about it,” says Naftalis. “A day in jail is a long time.”
This is a developing story. Please check back for updates.
