Feb 28, 2024 - Business

Sam Bankman-Fried seeks shorter prison sentence

Photo illustration of Sam Bankman-Fried with a gavel and red circles

Sam Bankman-Fried. Photo illustration: Sarah Grillo/Axios. Photo: Yuki Iwamura/Bloomberg via Getty Images

Sam Bankman-Fried's lawyers are arguing for a five- to seven-year prison sentence for his fraud conviction tied to FTX — over 90 years less than what's been recommended to the judge — because of his autism.

The big picture: His lawyers contend that Bankman-Fried (also known as SBF) never intended to take anyone's money, argue that no money was actually lost, and pointed to his autism diagnosis as reasons for a more lenient sentence.

Between the lines: In a sentencing memo filed with the court, Bankman-Fried's lawyers argued that the fraud in this case has been routinely tied to an $8 billion loss to customers — a statement they insist was never true.

  • They dismissed the claim of customer losses cited at trial, and in the sentencing recommendation as a "temporary shortfall in liquid assets" to cover the "unprecedented level" of customer withdrawal requests beginning on Nov. 6, 2022.

Zoom in: In late January, a bankruptcy attorney for FTX told the court that FTX customers and creditors are likely to be repaid in full.

  • SBF's camp cites that disclosure and disputes the subsequent argument that the development is the result of "any windfall of current crypto market conditions."
  • They argue that FTX was solvent at the time of the bankruptcy petition: "The money was there — not lost," they wrote.

They also push back on the idea of FTX investor losses. They cite the nature of equity investing, saying investors received a stake in FTX and not a "cash-back guarantee."

  • Further, they argued against the idea that FTX equity was worthless, saying the bankruptcy estate has grown in value, as have many of the platform's own venture investments.
  • "Given the sheer amount of assets identified, there is no basis on which to conclude that investors will suffer any losses due to the charged crimes, regardless of the Debtor Estate's decision to exclude them from the bankruptcy recovery," they wrote.

Under a subhead of "Sam's condition," Bankman-Fried's lawyers argued that his medical condition, including autism spectrum disorder — "how he is 'wired' as a human" — is "an aspect to be considered at sentencing."

  • They suggested that these factors affect how SBF may have evaluated risk and that his inconsistent "facial gestures and tone of voice" may have led to "miscommunication."

Reality check: Once one of the most prominent figures in the crypto industry, the now-disgraced entrepreneur was found guilty in November on all seven charges against him. Those include fraud against FTX customers and investors as well as Alameda's lenders and conspiracy to commit money laundering.

Flashback: The U.S. government presented a solid case against SBF, linking the testimonies of key insiders and company documents to prove beyond a reasonable doubt that his actions while leading the two firms were criminal, and not simply negligent.

  • The jury took less than five hours to reach the verdict.
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