FTX founder Sam Bankman-Fried is guilty of fraud

The FTX founder is in court now, waiting to see whether Judge Kaplan hands the 40 to 50 years in prison prosecutors recommend — or if his decision is closer to the more lenient five to six-year sentence that Bankman-Fried’s lawyers are pushing for.

The former crypto billionaire was found guilty on all seven charges he faced in November, and the judge is scheduled to deliver a sentence on March 28th. Bankman-Fried’s lawyers suggested a 5- to 6-year prison sentence but a filing submitted by the prosecution on Friday disagrees: 

While a Guidelines sentence – which would exceed 100 years, effectively a life sentence – is not necessary, the Government urges the Court to impose a sentence that underscores the remarkably serious nature of the harm to thousands of victims; prevents the defendant from ever again committing fraud; and sends a powerful signal to others who might be tempted to engage in financial misconduct that the consequences will be severe.

A sentence of 40 to 50 years is necessary to serve such purposes. 

It seems like Bitcoin ETFs may be a new trend for the financiers among us:

The companies getting involved here are, in many cases, household names (and not just for people who have their own pet theories about what happened to Satoshi Nakamoto). Industry giants BlackRock and Fidelity are among those positioned to make the first offerings, which could trade on exchanges like NASDAQ. Expectations around the new ETFs have led to a boom not just of bitcoin’s price but also boosted other digital currencies, including ones that were all but left for dead after their close association with convicted fraudster Sam Bankman-Fried.

The Wall Street Journal writes that federal prosecutors won’t pursue the five leftover charges that District Court Judge Lewis Kaplan previously split off to avoid delaying the trial that resulted in a guilty verdict for Bankman-Fried last month.

The prosecutors justified the decision in a letter to Kaplan yesterday:

… Much of the evidence that would be offered in a second trial was already offered in the first trial and can be considered by the Court at the defendant’s March 2024 sentencing. Given … the strong public interest in a prompt resolution of this matter, the Government intends to proceed to sentencing on the counts for which the defendant was convicted at trial.

Tiffany Fong, who’s been heavily involved with the FTX storyline, interviewed FTX creditor Louis D’Origny about the FTX bankruptcy plan. If you want to look at the Chapter 11 plan for yourself, it’s here.

David Mills, the Stanford Law prof who also defended ‘80s bond villain Michael Milken, flew to the Bahamas in his own jet when Bankman-Fried was first jailed. His friendship with Bankman-Fried’s parents may not survive the case.

Several dubious characters have made it onto Forbes’ lists in the 13 years it’s been putting them out. Here are ten it regrets:

• Sam Bankman-Fried, CEO of FTX

• Caroline Ellison, Co-CEO of Alameda Research

• Charlie Javice, Founder of Frank

• Nate Paul, Founder of World Class Capital Group

• Martin Shkreli, Founder of MSMB Capital

• Cody Wilson, Founder of Defense Distributed

• James O’Keefe, Founder of Project Veritas

• Phadria Prendergast, Editor-in-Chief of Women Of the City Magazine

• Steph Korey, Co-founder of Away

• Lucas Duplan, Founder of Clinkle

Following a jury’s conviction of former FTX boss Sam Bankman-Fried on fraud charges, the Wall Street Journal reports that several former FTX employees, including former general counsel Can Sun, are involved in launching a new cryptocurrency exchange based on Dubai.

Sun and Ferrante said they wanted to use the lessons they learned from FTX’s failure to protect user funds. Backpack Exchange, the name under which Trek Labs will do business, will use Backpack’s technology to allow users to hold funds in their own “self-custody” crypto wallets that the exchange itself wouldn’t be able to unilaterally access, they said.

With this stage of Sam Bankman-Fried’s big crypto fraud trial over after the jury found the former FTX boss guilty, The Verge reporter Elizabeth Lopatto joined the Crypto Critics’ Corner podcast to discuss everything that went on in the courtroom.

Along with hosts Bennett Tomlin and Cas Piancey, they discuss not only the trial’s final moments but also what’s next for SBF.

We’ve got the goss on early wake-ups, lawyer fashion, courtroom sketches, and other pressing matters. Go ahead and leave a question here if you’ve got one… [Arnold voice] I’ll be back.

Kevin Dugan’s overview really sums it up: stripped of the affectations, we discovered there wasn’t much to Sam Bankman-Fried at all.

The jury only started deliberating a few hours ago, but after all of the testimony and evidence, they notified court officials they reached a verdict, as former FTX CEO Sam Bankman-Fried faces seven charges, including wire fraud. We’ll have their decision here as soon as it is available.

According to a report from CNBC, the media will see it in about 10 minutes.

The 12-person jury will decide whether Bankman-Fried is guilty of seven criminal charges, including two counts of wire fraud. If convicted, Bankman-Fried faces over 100 years in prison.

The Verge’s Elizabeth Lopatto has been tracking the case from the courtroom, and from what she’s seen so far, it doesn’t look like Bankman-Fried’s defense has brought too many convincing arguments to the table:

The closing arguments made clear was how lopsided the case was. Bankman-Fried’s defense appears to be that he is a nice boy who would never do anything to hurt anyone on purpose… Bankman-Fried is right to be frightened. He brought excuses. The prosecution brought receipts.

That’s what experienced litigator Mitchell Epner wrote about this incident during the cross-examination of Sam Bankman-Fried. Elizabeth Lopatto’s summary of SBF’s final day of testimony captures it as part of being “vivisected” on the stand.

It was not until Judge Lewis Kaplan intervened to ask if Bankman-Fried had ever been told by Yedidia about that money, in words or in substance, that Bankman-Fried admitted he’d been told.

Trying to worm his way past tough questions by answering a slightly different question doesn’t seem to work as well for SBF in court as it did with investors and interviewers.

Sam Bankman-Fried’s lawyers are done calling witnesses in the big FTX fraud case over the cryptocurrency exchange’s collapse last year. The lawyers are likely preparing to make their closing arguments, and Elizabeth Lopatto will have more reports from the courtroom later today, following last night’s story on all the things SBF conveniently doesn’t remember.

One of the books, Zeke Faux’s Number Go Up, was given to Bankman-Fried on the witness stand yesterday (He did not recall anything he was quoted as saying, naturally). The author of the other, Michael Lewis, was sitting in the gallery.

As an avowed John Lanchester fangirl, you can imagine the delighted, high-pitched noise I made when I saw he’d reviewed both books.