By Luke Cohen
NEW YORK (Reuters) – Sam Bankman-Fried, the former billionaire cryptocurrency wunderkind, is due to be sentenced on Thursday on his conviction for stealing $8 billion from clients of the now-bankrupt FTX exchange he founded.
Bankman-Fried, 32, faces the prospect of decades behind bars after a jury found him guilty in November of seven counts of fraud and conspiracy. His sentencing is scheduled to begin at 9:30 a.m. EDT (1330 GMT) before U.S. District Judge Louis Kaplan in Manhattan.
The hearing will mark the culmination of Bankman-Fried’s fall from ultra-wealthy cryptocurrency entrepreneur and major political donor to US authorities’ biggest trophy yet in a crackdown on abuses in digital asset markets.
He faces a legal maximum of 110 years, but is likely to get less. Prosecutors are seeking a sentence of 40 to 50 years in prison for one of the largest financial frauds in US history.
“His life in recent years was one of incomparable greed and arrogance; of ambition and rationalization; and courting risk and repeatedly gambling with other people’s money,” the U.S. Attorney’s Office in Manhattan, which charged Bankman-Fried in December 2022, wrote in a March 15 sentencing memorandum.
Bankman-Fried’s defense attorney Mark Mukasey urged Kaplan to give him much less time, arguing that a sentence of less than 5-1/4 years would be appropriate.
Mukasey said FTX customers will likely be healed in the bankruptcy process and that Bankman-Fried has been working diligently since the November 2022 stock market collapse to recover funds.
“The memo distorts reality to support its precious ‘loss’ narrative and portrays Sam as a depraved supervillain,” Mukasey wrote in a March 19 court filing, referring to prosecutors’ sentencing motion.
Several FTX customers wrote to Kaplan expressing dismay that they would be compensated based on the value of their cryptocurrency at the time of FTX’s bankruptcy, rather than the higher levels at which those assets are trading today.
Bankman-Fried vowed to appeal his conviction and sentence.
“FALSE HOPE PROMISE”
An MIT graduate, Bankman-Fried boomed the value of bitcoin and other digital assets to a net worth of $26 billion, according to Forbes magazine, before turning 30.
Bankman-Fried became known for his shaggy curly hair and his commitment to a movement known as effective altruism, which encourages talented young people to focus on making money and give it away to worthy causes.
He was one of the biggest contributors to Democratic candidates and causes ahead of the 2022 US midterm elections.
But prosecutors say the responsible image he cultivated masked his years of misappropriation of client funds.
During the trial, three of his former close associates testified that he directed them to use FTX client funds to cover losses at his crypto-focused hedge fund Alameda Research.
Bankman-Fried testified in his defense that he made mistakes, such as not having a risk management team, but denied he intended to defraud anyone or steal customers’ money.
In their sentencing memorandum, prosecutors said Bankman-Fried could commit fraud again if released at a young age.
They pointed to his personal writings in the weeks after FTX’s collapse, in which he pondered options for rebuilding his image, such as “going against the revival agenda” or pushing the idea that “SBF died for our sins.”
“It is realistic that he would settle on a narrative, lean on it and convince other people to part with their money based on lies and the promise of false hope,” prosecutors wrote.
(Reporting by Luke Cohen in New York; Editing by Noeline Walder and Daniel Wallis)