SBF will face trial next month before Judge Lewis A. Kaplan. However, there is a legal analysis suggesting that the dispute over the amount of customer losses during the trial will be intense. Due to the recovery of the cryptocurrency market, SBF may face a lighter sentence…
(Summary:
Sell SBF’s luxury homes to repay debts! FTX liquidation team plans to sell 35 properties in the Bahamas.)
(Background:
US Department of Justice withdraws six additional charges against SBF (bribery, bank fraud, etc.) and will directly sentence him in March next year.)
Bankrupt cryptocurrency exchange FTX’s founder, SBF (Sam Bankman-Fried), will face trial next month before Judge Lewis A. Kaplan. Initially, the cryptocurrency community expected this trial to be a fair execution of justice. However, it is shocking that due to the recovery of the cryptocurrency market and the preservation of certain investments in FTX’s bankruptcy assets, SBF may face a lighter sentence.
SBF’s lawyers are likely to argue for “zero losses” for customers. In July of last year, the bankruptcy team stated that FTX’s global customer debt amounted to $8.7 billion. In November of the same year, SBF was found guilty on all seven charges, including fraud and money laundering, by the jury. However, with the significant recovery of the cryptocurrency market since 2023, thousands of unfortunate creditors will have the opportunity to fully recover the funds they had previously locked up, even if calculated based on the November 2022 prices.
Therefore, Estes, a former US Assistant Prosecutor, expressed in an analysis to Coindesk that there will be a fierce dispute over the amount of customer losses during the sentencing, especially if FTX’s legal team argues for a significantly lower loss amount or even a loss amount of $0, if all customers and creditors can be fully compensated.
The compensation amount will affect the sentencing. According to analysis by Jordan Estes, a partner at Kramer Levin law firm in New York City, the significant growth of the cryptocurrency market in the past year does have important implications for sentencing, as the extent of compensation can be taken into account in the judgment. For example, for low-loss cases, the sentencing guidelines suggest a range of 24 to 30 months. On the other hand, high-loss cases may result in severe sentencing ranges, with imprisonment of over 20 years or even life imprisonment.
Nevertheless, the US sentencing guidelines are only favorable to the defendant when the funds are returned to the victims before the discovery of the crime. In this FTX case, it is evident that SBF himself did not return the funds, and the compensation was made long after his crime was discovered.
Coindesk uses the case of financial fraudster Bernie Madoff as an example. It is known that Bernie Madoff died in prison at the age of 82 while serving a consecutive sentence of 150 years. In Bernie Madoff’s case, the bankruptcy trustee also recovered a large amount of stolen funds, but he did not receive any reduction in sentence. Prosecutors estimated the scale of the fraud case to be $64.8 billion.
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