Luke Cohen
NEW YORK (Reuters) – Sam Bankman-Fried, facing the prospect of spending most of his adult life behind bars, on Thursday appealed his conviction and 25-year prison sentence for stealing $8 billion from customers of the failed cryptocurrency exchange FTX. based.
Defense attorney Mark Mukasey announced plans to appeal to the 2nd U.S. Circuit Court of Appeals in Manhattan during Bankman-Fried’s sentencing hearing on March 28. The 32-year-old former billionaire crypto prodigy was convicted in November on seven counts of fraud and conspiracy in what federal prosecutors called one of the largest financial frauds in U.S. history.
Bankman-Fried’s appeal could take years. He faces a formidable challenge: His lawyers will need to convince the 2nd Circuit – and perhaps the U.S. Supreme Court – that U.S. District Judge Lewis Kaplan made serious errors that deprived Bankman-Fried of his legal rights and rendered the trial unfair.
The sentence Kaplan imposed was shorter than the 40 to 50 years that prosecutors had recommended but longer than the 5-1/4 years or less that Mukasey had proposed.
Bankman-Fried’s conviction puts an exclamation point on his fall from grace as an entrepreneur whose meteoric rise has drawn adulation, respect and envy from some quarters, and turned him into the biggest prize yet for U.S. prosecutors in their fight against excesses in cryptocurrency markets.
The MIT graduate has seen Bitcoin and other digital assets boom in value to $26 billion before turning 30, Forbes magazine estimates.
Bankman-Fried has also become a major political donor and advocate for effective altruism, a movement that encourages talented young people to focus on making money and giving it to worthy causes.
His wealth evaporated when Bahamas-based FTX filed for bankruptcy on November 11, 2022, following a wave of withdrawals from clients panicked by reports that Bankman-Fried had merged his assets with Alameda Research, a hedge fund focused on cryptocurrency, which he also controlled.
The following month, Bankman-Fried was arrested in the Bahamas and extradited to the United States.
‘BAD DECISIONS’
Three former close associates testified as prosecution witnesses against Bankman-Fried, saying he ordered them to use FTX funds to pay off Alameda’s debts, make political donations and buy luxury real estate in the Bahamas. They pleaded guilty to fraud and are awaiting sentencing.
Bankman-Fried testified in his own defense, admitting he made mistakes in risk management but denying he stole the money.
“I made a number of bad decisions,” Bankman-Fried said at his sentencing hearing. “These were not selfish decisions. They were not selfless decisions. These were bad decisions.”
His lawyers complained that prosecutors worked too closely with FTX’s bankruptcy estate and asked it to provide only information that could help their case.
During the sentencing hearing, Mukasey told Kaplan that the judge should ignore the prosecution’s claim that FTX customers lost $8 billion because he said the customers would likely eventually be reimbursed. Kaplan dismissed the suggestion as speculative and said Bankman-Fried lied when he said he knew Alameda had spent large sums of clients’ money shortly before FTX’s collapse.
“He considered the cost of being caught, minus the probabilities or improbabilities, and the benefit of escaping without being caught, taking into account the probabilities. That was the game,” Kaplan said of Bankman-Fried.
Earlier on Thursday, Bankman-Fried’s former lawyer Mark Cohen questioned the discrepancy between Bankman-Fried’s sentence and the maximum 18-month prison term for rival exchange Binance founder Changpeng Zhao for violating anti-money laundering laws.
Zhao pleaded guilty to paying Binance $4.3 billion and is scheduled to be sentenced on April 30. Authorities said Binance failed to report more than 100,000 suspicious transactions with U.S.-designated terrorist groups, including Hamas, al-Qaeda and the Islamic State.
“These are very different results,” Cohen, who represented Bankman-Fried at trial, said at a conference organized by the New York Bar Association. “Can you compare them from a political point of view? I would say it’s very difficult.”
Nicholas Roos, one of the prosecutors in the Bankman-Fried case, said at the conference that the two cases involved very different behavior. Zhao also admitted his guilt and voluntarily traveled to the United States to stand trial on the charges.