In a shocking turn of events, the U.S. Department of Justice (DOJ) has recommended a 40-50 year prison sentence for Sam Bankman-Fried, the former CEO of FTX crypto exchange. The DOJ has also urged a federal judge to impose an $11 billion fine and forfeiture.
Bankman-Fried was convicted on seven different counts of fraud and conspiracy in November, tied to the collapse of FTX and Alameda Research, two companies he founded. The charges stemmed from his actions of lying to investors, sharing fake documents, and pumping millions of dollars in illegal donations into the U.S. political system.
The DOJ’s Southern District of New York office, in a sentencing memo filed on Friday, stated that Bankman-Fried is deserving of a severe sanction, proportionate to his role in this historic fraud. The government has urged the court to impose a sentence that underscores the serious nature of the harm to thousands of victims, prevents the defendant from ever again committing fraud, and sends a powerful signal to others who might be tempted to engage in financial misconduct.
The prosecutors have called their request for an $11 billion judgment a particularly conservative sum and noted that more than a billion dollars had already been seized. The government’s efforts to claw back some of Bankman-Fried’s money targeted the political contributions he and other FTX executives made in the U.S. elections two years ago.
The memo also referenced testimony and allegations made by witnesses at the trial, including Bankman-Fried’s former inner circle. He bribed foreign government officials, the filing said, referencing former Alameda Research CEO Caroline Ellison’s testimony, and directed Alameda to take out a massive line of credit on FTX, referencing testimony from former Chief Technology Officer Gary Wang.
Bankman-Fried’s defense team urged a 6-year sentence in a memo last month, which the prosecution called “woefully inadequate” in Friday’s filing. In Friday’s memo, prosecutors took aim at the defense team’s argument that FTX creditors are likely to recover a majority of their funds, saying Bankman-Fried did not assist with these recoveries and his efforts “in many respects have been counterproductive”.
The sentencing of Bankman-Fried is scheduled for March 28. This case serves as a stark reminder of the potential pitfalls of the crypto industry and the severe consequences of financial misconduct.
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