FTX founder Sam Bankman-Fried, once described as the “golden boy” of crypto, is set to stare down a jury next week for his role in the collapse of his $32 billion crypto exchange.
After a jury selection process on Oct. 3, the trial begins in earnest on Oct. 4, with Bankman-Fried staring down seven charges. If found guilty on all counts, he faces a maximum sentence of 115 years in prison.
However, the judge won’t likely go easy on him, crypto lawyers tell Cointelegraph.
Here’s a first look at the calendar for SBF’s criminal trial this October.
The former CEO of FTX has plead not guilty to all charges brought against him.https://t.co/xRA27iUwGJ pic.twitter.com/RqMJErDPMW
— Cointelegraph (@Cointelegraph) September 28, 2023
In mid-November last year, Bankman-Fried suffered one of the most rapid and public reputational declines of all time, when his crypto exchange and its sister hedge fund Alameda Research collapsed and filed for bankruptcy, leaving a $10 billion hole in its wake.
Life behind bars?
Now less than a week out from the trial, Michael Kanovitz, partner at Loevy & Loevy law firm, told Cointelegraph that things don’t look particularly good for Bankman-Fried.
He predicts that if the government finds him guilty of committing fraud, he’s likely looking at spending the rest of his life behind bars.
“If he’s found guilty, I think he will get the maximum sentence.”
Kanovitz explained that courts look mainly at the severity of the crime and how the defendant behaved during the judicial process when handing down a sentence.
“If the government can prove he knowingly stole billions of dollars and destroyed documents to cover it up, that pushes the sentence toward the high end of the range,” he said.
WSJ called SBF a savior… ♂️ pic.twitter.com/ecNanSREIP
— CZ Binance (@cz_binance) September 26, 2023
Kanovitz also noted that courts reserve some discretion to be lenient during sentencing if the defendant “behaves themself” before the court. However, Kanovtiz believes Bankman-Fried hasn’t been doing that.
“SBF hasn’t done himself any favors here, as the court already found cause to believe that he was tampering with witnesses.”
“That’s very bad. Also, there is not a lot of ‘mitigation’ going the other way. He did donate to charity, but they don’t give you credit for being charitable with other people’s money,” Kanovtiz said.
Slightly less resolute than Kanovitz, Jeremy Hogan, Partner at Hogan & Hogan told Cointelegraph that he predicts that while Bankman-Fried may not get the maximum sentence, he’s almost certainly spending a considerable period in jail.
“SBF is going to prison for quite some time. But, I don’t know enough about it to get into details. Just a long time — more than 10 years.”
Breaking down the charges
Bankman-Fried will face a total of seven fraud charges. The burden of proof is carried by the government, which must prove beyond reasonable doubt that Bankman-Fried is guilty of the charges pressed against him, including:
- Committing wire fraud on FTX customers
- Conspiring to commit wire fraud on FTX customers
- Committing wire fraud on Alameda Research lenders
- Conspiring to commit wire fraud on Alameda Research lenders
- Conspiring to commit securities fraud against FTX investors
- Conspiring to commit [commodities?] fraud against FTX customers
- Conspiring to commit money laundering to hide the proceeds of wire fraud on FTX customers
Of these charges, only two — committing wire fraud on FTX customers and Alameda Research lenders — are “substantive,” meaning that the prosecution must prove that Bankman-Fried committed them.
The remaining charges are “conspiracy” allegations, which mean that the prosecution will have to prove that Bankman-Fried planned to commit these crimes with at least one other person.
UPDATE: SBF loses appeal to get out of prison temporarily to prepare for his trial. Jury selection begins OCT 3rd. Mark your calendars and conserve your chi. October will be a big month. pic.twitter.com/fhl6H31hZz
— Autism Capital (@AutismCapital) September 28, 2023
Kanovitz explained that government prosecutors are likely aware that they won’t be able to prove that Bankman-Fried was personally involved in every aspect of the FTX and Alameda violations, which is where the conspiracy charges come in.
However, if the prosecution can prove the conspiracy allegations, Bankman-Fried will be on the hook for the full brunt of the charges, he said.
“Whatever actions others took to achieve those illegal goals, the law treats it as if Bankman-Fried had done those things himself,” Kanovitz said.
SBF’s likely defense
Commercial litigator Joe Carlasare argues that Bankman-Fried’s lawyers are already running a “distraction and confusion playbook.”
“The defense will likely challenge the depiction of SBF as the central figure and instead portray him as a scapegoat, influenced by those around him who have already pleaded guilty.”
“I suspect his lawyers will highlight the quirky and eccentric aspects of SBF’s personality to depict him as easily influenced, immature, and impressionable,” Carlasare added.
1) What
— SBF (@SBF_FTX) November 14, 2022
Similarly, Kanovtiz said that the defense will seek to wrap SBF in a cloak of incompetence and uncertainty, by claiming that the other major custodians were doing similar things to FTX and that rules governing crypto were so unclear that he couldn’t knowingly violate them.
“He’ll bring forward evidence that other major crypto custodians were doing essentially the same thing and so he thought it was ok, which is the legal equivalent of telling the teacher ‘but CZ was doing it too!’”
Related: Sam Bankman-Fried’s political donations can be surfaced in trial, rules judge
Ultimately, however, Kanovitz predicts that these defenses will fall short, regardless of whether there are shadows of truth contained within them.
“How are you going to convince a jury of regular people that a man who built a multibillion-dollar fortune for himself was merely a bumbler when it came to taking care of other people’s money?”
“In that sense, he’ll be a victim of his own success.”
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