SBF will face trial before Judge Lewis A. Kaplan next month. However, some legal analysts believe that there will be intense controversy over the amount of customer losses during the trial. Due to the recovery of the cryptocurrency market, SBF may face a lighter sentence…
(Summary:
FTX liquidation team plans to sell 35 properties in the Bahamas to repay SBF’s luxury home debts.
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(Background:
The US Department of Justice withdrew 6 additional charges against SBF (bribing officials, bank fraud, etc.) and will directly sentence him in March next year.
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SBF, the founder of bankrupt cryptocurrency exchange FTX, will face trial before Judge Lewis A. Kaplan next month. The cryptocurrency community originally expected this trial to be a fair execution of the law. 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 may argue for “zero losses” for customers. In July of last year, the bankruptcy team stated that FTX’s global customer debt totaled $8.7 billion. In November of last year, SBF was found guilty of all 7 charges, including fraud and money laundering, by the jury. However, since 2023, the cryptocurrency market has experienced a significant rebound. Even when calculated at the prices of November 2022, thousands of unfortunate creditors will have the opportunity to fully recover the funds they were once locked into.
Therefore, Estes, a former US Assistant Prosecutor, expressed in an analysis to Coindesk that there will be intense controversy over the amount of customer losses during the sentencing. In particular, the FTX legal team may argue for a significantly lower loss amount, or even a loss amount of $0, if all customers and creditors can be fully compensated.
The amount of compensation will affect the sentencing. According to the analysis by Jordan Estes, a partner at Kramer Levin in New York City, the significant growth of the cryptocurrency market in the past year indeed has significant implications for sentencing, as the extent of compensation can be taken into account in the judgment. For example, for low loss amounts, the recommended sentencing range is 24 to 30 months. On the other hand, high loss amounts may result in severe sentencing ranges, including imprisonment for over 20 years or even life imprisonment.
However, the US sentencing guidelines only favor the defendant when funds are returned to the victims before the discovery of the crime. In the FTX case, it is apparent that SBF himself did not return the funds, and the compensation was made long after his crime was discovered.
Coindesk cited 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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