Author: David Z. Morris Source: unchainedcrypto Translation: Shan Oppa, Jinse Finance
Thursday, March 28, will mark the end of one of the strangest stories of the 21st century: the systematic theft of $8 billion by the sons of two Stanford legal scholars in the name of technological optimism and elite philanthropy, but whose true purpose was But it is to accumulate power as quickly as possible.
Outside the court before his criminal trial in U.S. District Court for the Southern District of New York.
That's the basic story of SBF, who will be sentenced on March 28 on seven fraud-related charges that a jury returned last November. His sentence will also be based on untried but well-documented charges that he used stolen client funds to bribe Chinese officials and fund a series of campaign finance frauds that once made SBF a force to be reckoned with in U.S. politics.
The sentencing recommendation federal prosecutors submitted to Judge Lewis Kaplan on March 15 may tell this story in its most concise and compelling form yet. Prosecutors recommended SBF be sentenced to 40-50 years in prison by painstakingly establishing SBF's repeated and deliberate deception, supported by a series of heartbreaking victim statements. That's a long sentence - but still well short of the possible 100-plus years.
Give investors a “favor”
SBF's defense team asked for leniency, arguing for a prison sentence of just six years. The claim relied heavily on two arguments that were disproven at trial: that SBF never actually stole any money, and that he donated a lot of money to charity. The first argument is largely based on the misleading notion that the FTX bankruptcy estate has "repaid depositors in full," a truly deceptive idea that FTX Recovery CEO John Ray III has stated in his own Strong rebuttal in briefing.
Indeed, the idea that FTX deposits would eventually be repaid echoes SBF’s criminal motivations. Despite attempts by him and allies like Michael Lewis to paint him as an unlucky man, SBF has clearly believed since his arrest in December 2022 that he could gamble with other people's money and win. As Caroline Ellison testified, the SBF views FTX client funds as a “good source of capital” to fuel the exchange’s growth, despite his repeated public claims that deposits are sacrosanct.
SBF thought he was doing savers and investors a favor by maximizing FTX’s “expected value” as quickly as possible – after which he could repay all deposits. In his mind, he was not stealing, but merely borrowing. Even after his conviction, allies such as Stanford's Jon Donoghue and Yale's Ian Ayers made essentially the same argument. Here's what his defense team has to say again.
Judge Kaplan has expressed his utter disdain for this moral decay. Kaplan quipped during his trial on October 11, 2023: “It’s like saying if I broke into the Federal Reserve Bank, stole $1 million, spent it all on Powerball and happened to win , that’s okay too.”
Likewise, an inconvenience of relying on SBF's charitable work as evidence of good character is that, as the trial established, the donations themselves came largely from stolen client funds. While the defense's leniency package included a series of character witness statements in support of SBF, the statements were limited and sometimes bizarre, including statements from many people who only knew SBF as a child, as well as from an alleged pedophile at SBF. The addict's statement. Seems to have become friends in prison.
I spent a month last year observing SBF criminal trials. Time and again, I have seen Judge Lewis Kaplan react with disdain, even anger, to this misleading and dishonest defense by the SBF defense team. Nor would he side with them a second time: I believe Judge Kaplan is very, very likely to follow the prosecution's recommendation and sentence SBF to roughly half a century in prison.
Given the way these things work, unless an appeal is unlikely to succeed, it means SBF will remain in prison until his sixties.
SBF’s downfall does not purge crypto of its sins
It is often said that SBF’s crimes have little to do with cryptocurrency as a technology, and this is certainly true. SBF's Wall Street background is similar to that of many other criminals involved in the 2022 crash, and he mostly views cryptocurrency as an easy way to make money because of its volatility. His fraud relied on centralization and opacity to deceive customers—if anything, it was an inversion of how on-chain finance works.
Still, he did choose to perpetuate a scam in the crypto industry, and his verdict is a time for the industry to reflect and perhaps learn a thing or two.
Most importantly, it’s crucial not to fall into complacency. Among the documents included in the prosecution's sentencing package was a truly insane list written by the SBF of ways he could have reconstructed his crimes following the collapse of FTX. These include the proposed narrative of "SBF dies for your sins."
Although there is no evidence of fraud, the plight of the Blast project is still reminiscent of what happened to SBF. The project's hasty launch and revenue-focused marketing approach all share the same drive to maximize that ultimately led SBF to crime, poverty, and now prison. As greed once again overrides concerns for deeper social and political reform that underlie the cryptocurrency movement, we will see another round of fragility, risk, fraud, and crashes. Smart people will look right through those promises of “native yields,” “double staking rewards,” or “20% APR” and recognize them for what they are: giant, flashing warning signs.
Ignoring warnings and taking risks were the root causes of SBF's downfall. He ignored repeated objections from his deputies, Caroline Ellison, Nishad Singh and Gary Wang, who will now face their own sentences. Convinced he was smarter than everyone else, SBF ignored the advice of his lawyers, believing they "had no idea what they were talking about," and refused to go on a full-blown PR trip in the wake of the FTX collapse. Those interviews helped prosecutors constrain his defense team and secure his conviction.
Industry Lessons and Life Lessons
The worldview that drives the SBF to implement its reckless plans is also based on a huge ego. This comes down to his belief in his infallibility and his disdain for the moral standards he believes "ordinary people" should abide by. Ellison testified at trial that the SBF did not believe that rules such as "Don't lie" or "Don't steal" applied to his chosen code of ethics. His moral code is a mixture of his mother's utilitarian consequentialism; the equally utilitarian "donate it before you make it" propaganda of the Effective Altruism movement; and the endless "anticipation" he learned as a trader on Jane Street. value” calculation.
There are many lessons we can learn from seeing someone who could have made a real contribution to the world instead regretting being imprisoned for almost his entire life. But some points seem particularly clear.
First, caution and humility are not sins. Whether as a founder or a trader, risk management is part of achieving sustainable success.
Second, ethics matter—not the ethics of what might happen in the future, but the ethics of how you treat others now.
Finally, greed is dangerous. While it’s possible to enjoy crypto assets as they appreciate in value, focusing too much on the growth of numbers instead of fundamentals is the quickest path to poverty.
Or worse.
