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25 Years

Last month, Sam Bankman-Fried, once a prominent figure in the cryptocurrency world, was given a 25-year prison sentence. As was the case during his trial the previous year, CoinDesk reporters were present to cover the proceedings.

During the sentencing hearing which lasted for 1 hour and 59 minutes, several key players were present and spoke out. These included Judge Lewis Kaplan, defense attorney Marc Mukasey, Assistant U.S. Attorney Nicholas Roos, an FTX creditor, and a lawyer representing other FTX creditors. Additionally, Sam Bankman-Fried himself made an appearance. In many ways, this hearing served as a concluding moment for all involved. Judge Kaplan expressed his views on who Bankman-Fried truly is, the prosecutor reinforced the case against him, and Bankman-Fried missed out on his final opportunity to shape his image in court.

The brief duration of the hearing might have underestimated its importance. During the trial, the judge addressed several objections raised by the defense concerning the sentencing guidelines proposals in the Presentence Investigation Report. The judge ultimately disagreed with the defense’s challenges to how the crimes committed by Bankman-Fried were classified, and set a starting point sentence of 110 years.

Sunil Kavuri, an outspoken FTX creditor, and attorney Adam Moskowitz representing FTX creditors, held a conversation during the court proceedings. Kavuri challenged the defense’s stance that creditors haven’t experienced significant losses since they’ll be repaid, focusing primarily on criticizing the current bankruptcy team, causing the judge to interject twice. Moskowitz discussed the assistance he received from FTX insiders in attempting to recover funds for creditors, mentioning “Sam and his group,” and urged the judge to take this cooperation into account.

Mukasey, the new defense attorney, described Bankman-Fried as an intriguing enigma who didn’t mean to cause harm and wasn’t malicious in nature. Meanwhile, Roos reiterated his closing argument from the trial, maintaining that Bankman-Fried had indeed misappropriated funds, regardless of how he chose to use them, which didn’t negate his greed.

Bankman-Fried made some remarks during the hearing. I previously consulted with a defense attorney who advised against speaking. The general sentiment among spectators following the hearing was that Bankman-Fried didn’t strengthen his position. He emphasized the importance of FTX’s customers, acknowledged the efforts of many former colleagues, attributed FTX’s 2022 bankruptcy to his leadership, and then shifted gears, placing blame on the bankruptcy estate for delayed refunds to creditors.

He admitted, “I made a string of unfortunate choices. None of them were purely self-interested or altruistic. They were simply the wrong moves. These mistakes, combined with other complicating factors and Alameda’s liquidity issue in November 2018, didn’t lead to bankruptcy for FTX, Alameda, or any customers. Instead, there were no customer losses to be redistributed.”

“My useful life is probably over,” he said at one point.

The executive repeated his earlier position, stating that it was possible for customers to have been refunded, as there are sufficient assets available now to completely reimburse them. He also suggested that there might be improprieties on the part of FTX’s current CEO, John J. Ray III, and the team handling the exchange’s reorganization.

He explained, “Now isn’t the right moment or setting to share the entire explanation behind their delay and uncertainty regarding the petition values versus current values. However, we can begin with Dan Friedberg’s affidavit, which he submitted about a year ago in bankruptcy court. The document was short, and it likely didn’t win him many allies for its filing.”

Towards the end, he hinted that his ex-colleagues or perhaps someone else could take on the role that the world expected of him.

Ausa Roos emphasized in his remarks that Bankman-Fried had not acknowledged fault for the failure of FTX, but rather suggested that outcomes might have been different if errors hadn’t been committed.

And finally, it was the judge’s turn again.

During the past few months, I’ve observed Judge Kaplan preside over pretrial hearings and the trial itself. I’m impressed by his involvement in this case, given his extensive workload that includes a high-profile case involving a former U.S. president. Despite his busy schedule, Judge Kaplan has brought vibrant energy to the proceedings related to Bankman-Fried’s trial.

This judge is aware that his decisions in the ongoing case will be heavily cited in media articles and legal documents for an extended period. As such, he may feel extra pressure to ensure the impartiality and fairness of his rulings with regard to the appeal of last year’s conviction against Bankman-Fried.

At the beginning of the proceedings, he made it clear that he completely disputes the defendant’s claim that no real harm was done. The defendant’s statement suggesting that FTX customers and creditors will receive their full payments is not only misleading but also illogical and speculative.

The judge’s negative attitude towards Bankman-Fried was clear to many during the trial. He openly scoffed at the former crypto executive while testifying, raising questions about how the jurors interpreted his comments. With no prior knowledge of FTX, crypto, or being on a jury, eighteen random members of the public may have been influenced by the judge’s apparent disdain. Despite trying to remain neutral during his instructions to the jury, Judge Kaplan couldn’t conceal his negative feelings towards Bankman-Fried throughout the trial.

Certainly, Sam’s defense wasn’t strengthened by his performance. Although he gave well-prepared answers to his own attorney, he struggled under the slightest challenge during cross-examination, as my team and I observed in the previous trial.

During the sentencing hearing, Judge Kaplan expressed his clear disapproval as if holding back no longer. He pointed to three distinct instances where he believed Bankman-Fried had lied under oath, rather than making a vague accusation of perjury based solely on his not guilty plea and subsequent conviction.

The judge expressed that it wasn’t necessary for him to point out every instance where Mr. Bankman-Fried allegedly testified untruthfully and knowingly at the trial. He mentioned some instances but there were more, and that was enough. Instead of outright lying, Mr. Bankman-Fried frequently avoided answering questions directly, split hairs, evaded queries, and tried to make the prosecutor rephrase questions in a way that would allow him to answer with less damaging responses than the truthful answers to the original questions would have been.

The judge was blunt in evaluating Bankman-Fried’s courtroom performance, which was described as subpar. I can understand the challenge Bankman-Fried faced in preparing for cross-examination while behind bars. However, his apparent irritation when his story was challenged during testimony left a lasting impression on both the jury and the witnesses, including the judge.

Bankman-Fried appeared oblivious to the impact of his behavior and remarks on the judge and jury, a phenomenon that was evident last year as well as in the recent proceedings.

The judge spoke, “For nearly three decades I’ve been in this role, yet nothing I’ve witnessed before can compare to that display.”

My friend inquired about my opinion on the sentence following its announcement. However, I haven’t reached a conclusion just yet. I concur with AUSA Roos who stated to both the jury and the judge that Bankman-Fried was untruthful throughout FTX’s existence.

Last year, Roos explained during the sentencing hearing that “He misappropriated his clients’ funds and deceived them about it. But the money wasn’t spent on personal luxuries or sports cars; instead, it went towards investments, repaying loans, covering expenses, buying property, and making political donations.” Furthermore, Roos emphasized that “These actions do not make him less greedy or change his motives. His ambitions, even if they seemed altruistic, did not cause him to do these things.”

Put simply, while Bankman-Fried might honestly think that employing his businesses’ resources towards pandemic preparation and other objectives served the greater good, it doesn’t necessarily imply that he hadn’t used client funds or been dishonest regarding this matter.

Is a 25-year prison sentence justified? Maybe so. However, I’d like to bring up something I mentioned when he was initially convicted – 25 years is a considerable length of time. The pace of the world is swift, often faster than we perceive in our everyday existence. Twenty-five years ago, pagers were the rage and car phones were starting to lose favor. Steve Jobs’ smartphone revolution was still in its infancy, GeoCities was a novel Yahoo! feature, and Pokémon had only been around for three years.

Bankman-Fried’s legal team is planning to file an appeal in the ongoing trial. This was anticipated from the beginning of the proceedings. A hearing will take place, and it remains uncertain how the appeals court will make its decision. As a journalist, I see it as a challenging prospect for his team to win this appeal.

The story of Bankman-Fried reaches a conclusion for us in this book, but keep in mind that prison doesn’t silence him entirely, and he may still express his opinions, leaving room for further exploration.

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