The upcoming sentencing hearing for Sam Bankman-Fried, set for March 28, could be influenced by a “remarkable surge” in the value of Bitcoin, the Financial Times has reported. Scheduled to take place in the Southern District of New York before Judge Lewis Kaplan, the hearing could potentially be influenced by recent developments surrounding the cryptocurrency.
Bankman-Fried’s lawyers have seized upon the skyrocketing prices of various cryptocurrencies and AI assets held by FTX, arguing that this development could mitigate the financial harm caused by their client’s actions. They have made a bold claim, stating: “Each victim… will receive 100 cents on the dollar, plus interest.”
The defence team has argued for a lenient sentence for Bankman-Fried citing the recovery efforts in the aftermath of FTX’s collapse. They assert that victims will eventually be fully compensated, highlighting the recent surge in Bitcoin and other cryptocurrency prices, the FT report said.
Bankman-Fried’s lawyers contend that the $8 billion shortfall in FTX’s balance sheet was merely a temporary setback caused by unprecedented customer withdrawal requests during a rush on FTX in late 2022. They emphasize that victims will receive 100 cents on the dollar, plus interest, bolstered by the increased value of cryptocurrency assets, the report added.
“The harm to customers, lenders, and investors is zero,” Bankman-Fried’s lawyers wrote to Kaplan last month, arguing for a sentence of no longer than six-and-a-half years. The $8bn hole, they said, reflected “the temporary shortfall in liquid assets to cover the unprecedented level of customer withdrawal requests” during a rush on FTX in late 2022.
In stark contrast, John Ray, the caretaker CEO of FTX overseeing the bankruptcy proceedings, offered a more tempered view. Ray underscored the complexity of victim restitution and the enduring challenges in achieving full economic recovery for all affected parties. Ray contends that even the best-case scenario will not result in a complete restoration of victims’ economic positions prior to the fraud.
“Mr Bankman-Fried’s victims will never be returned to the same economic position they would have been in today absent his colossal fraud,” Ray told Kaplan in a letter this month, as quoted by FT. “Indeed, even the best conceivable outcome . . . will not yield a true, full economic recovery by all creditors and non-insider equity investors as if the fraud never happened.”
The disparity between Bankman-Fried’s lawyers’ optimistic claims and Ray’s cautious assessment raised questions about the potential influence of Bitcoin price fluctuations on the sentencing decision. While Bankman-Fried’s defence team seeks to downplay the severity of the crimes and advocate for a shorter sentence, Ray’s statements underscored the lasting impact and ongoing uncertainties surrounding victim restitution.
Prosecutors, who have urged the court to impose a sentence of 40 to 50 years, have dismissed Bankman-Fried’s claims as a “distorted depiction” of the bankruptcy proceedings. They maintain that many customers may never recover the full value of their investments, and the emotional toll on victims cannot be undone by potential recoveries.
Prosecutors argued that Bankman-Fried’s victims “have received no recovery and there is no timeline for when any such payments will be made.”
“The fact that two years later victims may receive some money back through FTX’s bankruptcy is of little comfort for those victims who needed the money in November 2022,” prosecutors wrote, as quoted by FT. “The suffocating sense of dread and despair that victims felt when they could not withdraw their money, their shame and embarrassment, and the resulting damage to lives and businesses, cannot be undone through the bankruptcy.”
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it’s all here, just a click away! Login Now!
