Federal prosecutors said Friday that cryptocurrency mogul Sam Bankman-Fried should be sentenced to 40 to 50 years in prison after being found guilty of orchestrating a multibillion-dollar fraud.
Prosecutors outlined their recommendations in a filing in U.S. District Court in Manhattan. Mr. Bankman-Fried's sentencing hearing is scheduled for March 28 when Judge Lewis A. Kaplan will decide his fate. He could face up to 110 years in prison.
“Justice demands that he be sentenced to a prison term that reflects the special nature of his crimes,” prosecutors wrote in a 116-page sentencing memo to the judge.
The federal probation department separately recommended a 100-year sentence for Bankman Fried, 32, effectively giving him a life sentence. But prosecutors said in the filing that despite the seriousness of the crime, it was not feasible to send him to prison for life because of his relative youth.
In papers filed last month, Mr Bankman-Fried's lawyers argued he should receive no more than six years and six months in prison.
A spokeswoman for Mr. Bankman-Fried said on Friday that his lawyers would submit a response to the government early next week.
Just 18 months ago, Mr. Bankman-Fried was a cryptocurrency mogul overseeing cryptocurrency exchange FTX, a $40 billion business empire. But FTX collapsed overnight, and he became a target for law enforcement.
Last November, a federal jury in Manhattan found Mr. Bankman-Fried guilty of stealing $8 billion from FTX customers to finance political donations, investments in other companies and luxury real estate purchases.
The collapse of FTX and Mr. Bankman-Fried's subsequent arrest and conviction were seen as a historic low point for the loosely regulated world of cryptocurrency.
“The cryptocurrency industry may be new, but this type of fraud and corruption is as old as time,” Damian Williams, U.S. attorney for the Southern District of New York, said after the ruling.
Since then, the cryptocurrency industry appears to have put Mr. Bankman-Fried's crimes in the rearview mirror. As he prepared for sentencing, prices of most digital assets soared, with Bitcoin hitting record highs this month.
Prosecutors said in a filing Friday that a 40 to 50-year sentence is appropriate given the scale of Mr. Bankman-Fried's fraud and the impact it has had on people around the world, including those who invested part of their retirement and life savings in FTX. It was revealed.
“The scale of Bankman-Fried’s fraud was so extraordinary that it warrants severe punishment,” prosecutors wrote. “The losses of at least $10 billion make this one of the largest financial frauds of all time.”
Prosecutors said there was a real risk that Mr Bankman-Fried would commit fraud in the future if he received a lighter sentence.
In their sentencing submissions, prosecutors included several pages of customer messages sent to Mr Bankman-Fried via X (formerly Twitter) at the time of the FTX collapse. In many posts, customers expressed their anger about not being able to access their accounts.
Marc Mukasey, an attorney hired by Bankman-Fried to prepare sentencing, said in his legal filing that the 100-year sentence recommended by the Probation Department is the 150 years given to Bernard Madoff, who pleaded guilty in 2009. It was claimed that it would be reminiscent of . He ended up running one of the largest Ponzi schemes in history. Mr. Mukasey said it was inappropriate to compare the two men, given the “length and amount” involved in Mr. Madoff's crimes. This is a fraud that resulted in $64 billion in paper losses over 20 years.
He called the probation department's recommendations 'barbaric' and 'grotesque'.
Mr. Mukasey also pointed out that it took court-appointed trustees more than 15 years to return about $14 billion to Mr. Madoff's investors. By contrast, bankruptcy lawyers overseeing FTX's liquidation have suggested that customers of Mr. Bankman-Fried's failed exchanges are likely to get all their money back on a relatively quick schedule.
Prosecutors said in the filing that even if FTX customers got most of their money back, they would have to wait more than two years. “This offers little consolation to victims who needed money in November 2022,” prosecutors said.
In the filing, prosecutors asked Judge Kaplan to order Mr. Bankman-Fried to forfeit more than $10 billion in losses and stolen money from his crimes. Given the millions of potential victims and the complexity of calculating losses, prosecutors said any funds handed over by Mr. Bankman-Fried could be distributed to the FTX bankruptcy.
Judges are not required to follow federal sentencing guidelines. And when sentencing, Judge Kaplan may consider a variety of factors, including Mr. Bankman-Fried's age, the fact that he is a first-time offender and his potential for rehabilitation.
But one factor that may work against Mr. Bankman-Fried is that he chose to testify at trial and seemed evasive at times during cross-examination. If Judge Kaplan concludes that Ms. Bankman-Fried gave false testimony, she may consider this when determining her sentence.
In a column in the New York Law Journal this week, John S. Martin, a former Manhattan federal judge, criticized “unreasonably long sentences” for most fraud and white-collar crimes. He said a 100-year sentence “has no effect on the crime rate.”
“Let me be clear: Bankman-Fried deserves to be punished,” Mr. Martin wrote. But he added, “Our extremely long prison sentences are one of the reasons the United States has the largest prison population in the world.”