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Sam Bankman-Fried is just learning how much prison time he faces for FTX crimes

FTX co-founder Sam Bankman-Fried will learn on Thursday how much prison time he faces after being convicted of defrauding customers, investors and lenders.

The entrepreneur who led the largest crypto collapse in history faces up to 110 years. Prosecutors asked for a prison sentence of 40 to 50 years, while Bankman-Fried’s lawyers asked for six and a half years.

The decision will be made by Manhattan federal Judge Lewis Kaplan, who presided over Bankman-Fried’s trial last fall and confronted the defendant at several points.

Kaplan even revoked Bankman-Fried’s bail and put him behind bars before the trial began. During the trial, the judge repeatedly admonished Bankman-Fried on the witness stand for not answering questions directly.

FILE - FTX founder Sam Bankman-Fried leaves the Manhattan federal courthouse in New York on June 15, 2023. The CEO of the cryptocurrency company founded by Sam Bankman-Fried attacked the former crypto power player on Wednesday, March 20, 2024, in a letter to a federal judge scheduled to sentence him next week, expressing his claim that Customers, lenders and investors affected were “not hurt” was callously false and he led a “life of delusion”. (AP Photo/Bebeto Matthews, File)

FTX co-founder Sam Bankman-Fried will learn his prison sentence on Thursday. (ASSOCIATED PRESS)

Dozens of FTX victims, including those who said they lost their entire savings as a result of FTX’s demise, have submitted letters calling on Kaplan to impose a harsh penalty.

Bankman-Fried himself argued for a lighter sentence, saying in court submissions that prosecutors had distorted reality by characterizing him as a “depraved supervillain” motivated by material wealth and luxury.

Instead, his lawyers argue in a court filing that Bankman-Fried “renounces materialistic trappings” and suffers from a serious illness that causes him to “almost completely lack joy, motivation and interest.”

The lawyers went on to say that Bankman-Fried was diagnosed with an autism spectrum disorder, which causes him to assess risk at times with a “different relative evaluation of emotion versus ultimate impact” than many people.

Bankman-Fried will have another chance to make one final statement in court on Thursday, or “speech.”

Penalties for white-collar crimes have varied in recent years, from 150 years for Bernard Madoff to 11 years for Elizabeth Holmes.

rise and fall

Bankman-Fried’s conviction completes the dramatic fall from grace of a former billionaire who ran the world’s second-largest crypto exchange and was the face of a boom in digital assets in the early years of the pandemic.

His empire imploded in late 2022 when FTX filed for bankruptcy and he was arrested by authorities in the Bahamas.

His trial last fall fascinated the financial world. A 12-member jury ultimately sided with prosecutors, arguing that Bankman-Fried intentionally stole up to $14 billion in customer deposits from his cryptocurrency exchange as part of a scheme he carried out with three of his top executives.

Prosecutors alleged the group gave Alameda Research, Bankman-Fried’s sister crypto trading firm, “secret” backdoor access to FTX’s customer deposits and then spent the money on investments, loan repayments, political contributions and real estate.

Sam Bankman-Fried, the jailed founder of bankrupt cryptocurrency exchange FTX, is sworn in as he appears in court at a courthouse in New York, United States, on February 21, 2024, in this court sketch for the first time since his conviction on fraud charges in November. REUTERS/Jane Rosenberg

A sketch of Sam Bankman-Fried’s appearance at a court hearing in February. (REUTERS/Reuters)

“He spent his clients’ money and lied to them about it,” prosecutor Nicolas Roos said in the government’s closing argument.

The other three FTX executives — Alameda CEO Caroline Ellison, FTX co-founder Gary Wang, and FTX technical director Nishad Singh — pleaded guilty to fraud charges and testified against Bankman-Fried as part of plea agreements with the government.

They are expected to be sentenced later in 2024.

Bankman-Fried testified that poor business decisions and management errors – rather than fraud – were responsible for the failure of his cryptocurrency exchange.

“Did you defraud anyone?” Bankman-Fried’s attorney, Mark Cohen, asked him to take the stand during the defendant’s risky gamble in the final days of the trial.

“No, I didn’t,” Bankman-Fried replied.

“The extent of the loss is sufficiently large”

Martin Auerbach, a white-collar criminal defense attorney and former federal prosecutor, told Yahoo Finance in November that Bankman-Fried’s challenge in sentencing was ensuring that “the extent of the loss was sufficiently large.”

Federal sentencing guidelines, while advisory rather than mandatory, suggest lengthening prison sentences as victims’ losses mount. According to Auerbach, calculation is a decisive factor in white-collar crime.

“He’s probably at the top of the charts,” Auerbach said, referring to between $10 billion and $14 billion that prosecutors say Bankman-Fried stole from his FTX customers, lenders and creditors.

The judge “might well think that this is a message that needs to be said not just to this person but to an entire generation.”

Judge Kaplan will be tasked with weighing the billions in money that Bankman-Fried has put at risk against the fact that the company is now indicating that those injured may be paid back in full.

Former US President Donald Trump (not seen) testifies as he testifies before the Manhattan Federal Court in New York City, USA, in the second civil trial involving E. Jean Carroll Trump accused of raping her decades ago before U.S. District Judge Lewis Kaplan takes the stand, Jan. 25, 2024, in this courtroom sketch. REUTERS/Jane Rosenberg

A sketch of U.S. District Judge Lewis Kaplan, who will decide the sentencing of Sam Bankman-Fried. (REUTERS/Reuters)

In January, lawyers for the defunct exchange told a Delaware bankruptcy court judge that a plan for FTX to fully repay customers and general unsecured creditors was “within reach.”

“The $8 billion client amount used by the government does not reflect customer losses at the time of the bankruptcy filing,” Bankman-Fried’s lawyers wrote in a letter before the ruling.

“It reflects the temporary lack of liquid assets to cover the unprecedented level of withdrawal requests from customers starting November 6, 2022, which reached $4 billion per day on the morning of November 8, 2022.”

Bankman-Fried’s lawyers argue that prosecutors misrepresented at trial that those client funds simply disappeared.

Regardless of what happens Thursday, prosecutors have already decided to protect Bankman-Fried from further legal jeopardy.

They withdrew plans to file a separate indictment against the businessman, accusing him of committing bank fraud and bribing Chinese officials.

Alexis Keenan is a legal reporter for Yahoo Finance. Follow Alexis on Twitter @alexiskweed.

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