(NewsNation) — Sam Bankman-Fried, the 32-year-old founder and former CEO of cryptocurrency exchange FTX, is scheduled for sentencing Thursday on fraud charges stemming from federal investigations and reports of misused customer funds.
He faces a possible hefty sentence, which his attorney has called “grotesque” and “barbaric,” arguing to confine Bankman-Fried’s potential prison term to single digits.
Federal District Court Judge Lewis Kaplan will oversee the sentencing, scheduled for 9:30 a.m. ET in the District Court for the Southern District of New York in Manhattan.
What did he do?
A New York jury in November convicted Bankman-Fried of fraud for stealing at least $10 billion from customers and investors.
His arrest came just a day before he was slated to testify before the House Financial Services Committee.
At the time, Bankman-Fried was one of the world’s wealthiest people on paper. FTX had grown to become the second-largest cryptocurrency exchange worldwide, and Bankman-Fried had an estimated net worth of $32 billion.
In November 2022, however, reports began questioning FTX’s finances. Customers moved to withdraw billions of dollars, but FTX could not meet all the requests after allegedly using its customers’ deposits to cover bad bets at Bankman-Fried’s investment arm, Alameda Research.
What’s the maximum penalty?
Bankman-Fried technically faces as many as 110 years in prison, though prosecutors have recommended about half of that.
In February, Bankman-Fried lawyer Marc Mukasey said a suggested 100-year prison sentence based on probation calculations at the time would be “grotesque” and “barbaric.”
The defense lawyer called on the judge to reject the proposal for a “brilliant, complex and humane person” and first-time offender.
What is the prosecution asking for?
Since then, federal prosecutors have announced they are seeking a sentence of 40 to 50 years for Bankman-Fried.
They filed that recommendation earlier this month ahead of Thursday’s sentencing. The judge, however, will also consider the probation officers’ suggested 100-year prison sentence and defense lawyers’ request for leniency and a term of imprisonment that doesn’t exceed single digits, the Associated Press reported.
What has the defense said?
Bankman-Fried’s lawyers have rejected the “evil genius” image they say media has made him out to be, highlighting instead that the FTX founder is a first-time, nonviolent offender. A proper sentence would be based on guidelines calling for 5 to 6 1/2 years, his lawyers have said.
“(Bankman-Fried) was joined in the conduct at issue by at least four other culpable individuals, in a matter where victims are poised to recover — were always poised to recover — a hundred cents on the dollar,” Mukasey wrote in court filings earlier this year.
No matter what sentence Bankman-Fried receives, he’ll never be truly free, the man’s lawyer said, according to the AP. Rather, the FTX founder will face scorn from the public for the rest of his life, Mukasey wrote.
How could it affect the crypto industry?
Bankman-Fried laid the groundwork to legitimize and normalize cryptocurrency in the public eye. In light of his conviction, stricter regulations surrounding cryptocurrency could be forthcoming, NewsNation contributor Lydia Moynihan said in the wake of the trial.
“This is a massive step back in what we’ve been seeing with the cryptocurrency agency,” she said.
FTX Trading Limited CEO John J. Ray III has said that Bankman-Fried’s victims continue to suffer from the fallout.
According to the AP, the Bankruptcy Code requires each claim to be valued as of Nov. 11, 2022, when the value of cryptocurrencies was 400% lower than it is now.
Ray also noted some money can’t be recovered, including $150 million in bribes that prosecutors say were paid to Chinese government officials or nearly 100,000 bitcoins listed on customer statements, when there were just 105 bitcoins left on the FTX.com exchange.
The Associated Press contributed to this report.