The 31-year-old faces up to 20 years in prison on each of the most serious charges after he was convicted in November of funneling customer funds from his FTX crypto currency exchange into an affiliated hedge fund for risky investments, real estate and executive loans before both collapsed in 2022.
The sentencing will be a first look into Bankman-Fried’s post-conviction strategy after spending all of his trial last year insisting that he had done nothing illegal. US District Judge
Bankman-Fried is still likely to face at least a decade behind bars, said Sarah Krissoff, a former federal prosecutor.
“They’re going to lose credibility with the judge if they ask for no jail time,” said Krissoff, who is now defense attorney at Cozen O’Connor in New York. “What they’re going to do is ask for a period of imprisonment that allows him to get out of prison at some point and get out of prison while he can still actively participate in society.”
Bankman-Fried’s sentence is unlikely to match some of the largest punishments handed down to white-collar criminals, such as Sholam Weiss, who received 845 years in prison in 2000 for racketeering and fraud linked to the collapse of the National Heritage Life Insurance Co. His sentence was later
Bankman-Fried faces as much as 20 years in prison for the most serious charges of which he was convicted - wire fraud, conspiracy to commit wire fraud and conspiracy to commit money laundering. He faces five years on two other counts of which he was found guilty - conspiracy to commit commodities fraud and conspiracy to commit securities fraud.
The government has until March 15 to file its sentencing memorandum.
Kevin O’Brien, a former federal prosecutor who’s now a defense lawyer, said the key will be the presentencing report from the probation department, a confidential document given to attorneys for Bankman-Fried and the government. But that recommendation is often based on financial harm, and prosecutors estimated FTX’s fraud ran into the billions.
“One has to assume that the numbers are going to be stratospheric,” O’Brien said, noting that the estimated dollar loss to victims in the case “were simply off the charts.”
Kaplan will use federal sentencing guidelines to help determine the ultimate punishment. The guidelines take into account the seriousness of the offenses, the defendant’s criminal history, as well as the amount of the losses.
Kaplan has argued for caution when it comes to the guidelines, saying during the May 2022 sentencing of a man who pleaded guilty to a Ponzi-like cryptocurrency scheme that the loss often plays a “disproportionate role” in determining the punishment.
But Bankman-Fried’s rocky relationship with Kaplan won’t help the one-time crypto mogul. He has been testing the judge for more than a year, from insisting the identities of his bail guarantors remain a secret to leaking the diary notes of his ex-girlfriend — a key government witness — to the press.
The latter issue led Kaplan to revoke Bankman-Fried’s bail weeks before the trial was scheduled to start. Bankman-Fried has been in a federal jail in Brooklyn since August.
The trial itself featured another setback for Bankman-Fried following an uncommon proceeding. The judge limited what Bankman-Fried’s team could tell jurors about advice he got from lawyers, but not before putting the former FTX chief executive officer on the stand for three hours, outside the presence of the jury, to preview his testimony.
Bankman-Fried in January parted ways with his attorneys that oversaw his defense at the contentious trial and hired
It’s not uncommon for defendants to get new lawyers following conviction, Krissoff said, as it can help to get a different perspective.
Mukasey is an experienced lawyer with a history of representing white-collar defendants. Late last year, he secured a four-year sentence for Nikola Corp. founder Trevor Milton, well below the 11 years sought by prosecutors, in the same court where Bankman-Fried is being sentenced.
It’s not unusual to get “fresh eyes on it at sentencing and also just to bring in someone different before the judge,” she said. “I do think just a new relationship can help.”
Mukasey is also representing former
Kaplan, meanwhile, who was appointed to the bench by President Bill Clinton in 1994, has “handled a million sentencings and is extraordinarily experienced.”
“He has all of that experience to inform what he’s going to do here,” Krissoff said.
The case is US v Bankman-Fried, 22-cr-673, US District Court, Southern District of New York.
(Updates with detail on sentencing guidelines and previous comments from the judge.)
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