SBF will face trial next month before Judge Lewis A. Kaplan. However, there is a school of legal analysis that suggests the dispute over the amount of customer losses during the trial will be intense. Due to the resurgence of the cryptocurrency market, SBF may face a lighter sentence.
As a brief summary, the liquidation team of FTX plans to sell 35 properties in the Bahamas in order to repay SBF’s mansion debts.
As background information, the U.S. Department of Justice has dropped an additional six charges against SBF (bribery, bank fraud, etc.) and will directly sentence him in March next year.
FTX founder and bankrupt cryptocurrency exchange, SBF (Sam Bankman-Fried), will face trial next month before Judge Lewis A. Kaplan. Originally, the cryptocurrency community expected this trial to be an example of the fair execution of the law. However, to their surprise, due to the resurgence of the cryptocurrency market and the preservation of certain investments in FTX’s bankruptcy assets, SBF may face a lighter sentence.
SBF’s lawyers are expected to argue for “zero loss” for the clients. In July of last year, the bankruptcy team stated that FTX’s global customer debt amounted to $8.7 billion. And in November of the same year, SBF was found guilty of all seven charges, including fraud and money laundering, by the jury. However, since 2023, the cryptocurrency market has significantly rebounded, and even calculating based on November 2022 prices, thousands of unfortunate creditors will have the opportunity to fully recover their previously locked funds.
Therefore, Estes, a former U.S. assistant prosecutor, stated in an analysis to Coindesk that there will be a fierce dispute over the amount of customer losses during the sentencing phase. In particular, the FTX legal team may argue for a significantly lower loss amount, possibly even zero dollars, if all clients and creditors can be fully compensated.
The amount of compensation will affect the sentencing. According to the analysis of Jordan Estes, a partner at the New York law firm Kramer Levin, the significant growth of the cryptocurrency market in the past year does have significant implications for sentencing, as the extent of compensation can be taken into consideration in the judgment. For example, for low-loss cases, the recommended sentencing range is 24 to 30 months. On the contrary, high-loss cases may result in severe sentencing ranges, with imprisonment of over 20 years or even life imprisonment.
However, the U.S. sentencing guidelines are only favorable to the defendant when the funds are returned to the victims before the crime is discovered. In the FTX case, it is apparent that SBF himself did not return the funds, and the compensation took place long after the discovery of the crime.
Coindesk uses the case of financial fraudster Bernie Madoff as an example. It is known that Bernie Madoff died in prison at the age of 82 while serving a consecutive sentence of 150 years. In Bernie Madoff’s case, the bankruptcy trustee also recovered a large amount of stolen funds, but he did not receive any reduction in sentence as a result. Prosecutors estimated the scale of the fraud case to be $64.8 billion.
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