Editor of this issue | Cat brother Wu Blockchain about blockchain
SBF was tried in Manhattan federal court at 21:30 on March 28 and was eventually sentenced to 25 years in prison by the judge for billions of dollars in fraud. SBF said he would appeal the conviction. The judge also recommended that he be imprisoned in a facility near his parents' home in California, noting that his notoriety and autism made him more vulnerable. Although the federal system does not allow parole, he may be released a few years early if he behaves well. Earlier prosecutors recommended a sentence of 40 years, which could be a life sentence according to guidelines.
Inner City Press live tweet:
https://x.com/innercitypress/status/1773340043744010640?s=20
Bloomberg reports:
Judge Kaplan
We will begin with the U.S. dispute regarding losses of over $550 million, and I reject the defense’s arguments regarding losses, both legally and factually. The claim that customers and creditors will be repaid in full is misleading. Investors and lenders are also injured parties. The crimes here include taking FTX customers’ funds, which the defendants had no right to use, and using them for speculative investments in Alameda, as well as a variety of other matters.
The incidental rise in the value of some cryptocurrencies has nothing to do with the severity of the crime committed. A thief who took his stolen goods to Las Vegas and gambled them away successfully should not receive a reduced sentence even if he repaid the stolen money. It is only a guess that people will be repaid, and the amount lost is far more than $550 million, which is the highest level. I think investors lost $1.7 billion, lenders lost $1.3 billion, and customers lost $8 billion.
On the obstruction of justice front, I find that Mr. SBF's text messages to the former General Counsel constituted an attempt to tamper with a witness. Based on trial testimony, I made three perjury findings, including: falsely stating that he was unaware that Alameda had used FTX customer funds until the fall of 2022; falsely stating that he first learned of the $8 billion shortfall in October 2022; and falsely stating that Alameda's repayment of third-party loans would require Alameda to borrow more customer funds from FTX.
I have limited my finding to obstruction of justice - there could be more. The overall offense level is 60, and once you go over 43, you can't go any higher. The guidelines are life in prison. But in this case, the maximum sentence is 1,320 months.
Victim Sunil
I want to respond to that argument about the zero loss. They continue to claim that in the media. It’s untrue. I’ve been suffering for two years. The bankruptcy estate is assuming or mischaracterizing us as unsecured creditors. We have property rights. Sullivan & Cromwell has trampled on our property rights. They’ve liquidated billions of dollars of crypto assets. There’s a token S&C sold for 11 cents and it’s now trading for two dollars. FTX has $10 billion of Solana tokens – they sold it at a 70% discount. They’re selling it to their own customers – Galaxy – and it’s destroying customer value. It’s our property. And then there’s Anthropic. Our assets were used to buy shares. It’s our property. I filed a protest and thousands of customers supported me. At least three people committed suicide because of the fraud that FTX did. So when this FTX went bankrupt… I guess… the way I felt and how it related to Sam, it hurt me, the other conspirators, accomplices, and abettors, need to be held accountable.
Defense Attorney Mukasey
Nothing I say today is meant to be disrespectful to the jury—we will appeal—or to the victims, we have listened, we understand the pain. My team did not sit through the trial, but we have studied the record. The government pointed to James Nicholson, who stole from widows. Carl Greenwood was sentenced by Judge Ramos. Madoff stole from Holocaust survivors. (Note: In mentioning these figures and their crimes, the defense sought to show that SBF's actions, while controversial, should be viewed more leniently than some other crimes that are considered more serious and premeditated.)
But that’s not Sam. He doesn’t want to personally cause pain to anyone in any way. Sam is not a heartless financial serial killer. He’s not predatory. He makes decisions based on math in his head, not malice in his heart. His mom says he’s misunderstood. It’s easy to pigeonhole people as greedy scammers…Sam never rushed off with the money. He stayed until the end. He’ll tell you how much it meant to him that people got paid back. He’s a dorky math nerd. He’s passionate about vegetarianism. He has an intellect beyond the ordinary. He’s a wonderful enigma. He can parse words better than a Talmudic scholar. He’s a billionaire who doesn’t care about material possessions. In middle school, he was thinking about his ethical obligations to the global population. In college, he spent time helping animals. On Wall Street, he donated his earnings to charity. That was until he was 21. Sam’s devotion to others was there long before FTX. He never wanted to be the king of crypto. He just wanted to make the biggest positive impact in the world. But it’s not the means to the end, that would hurt the altruism movement…Who’s still rooting for him now? It’s not Tom Brady or Katy Perry. It’s the scientists who are behind him. It’s not a pretense. SBF is committed to doing good… He’s been coaching people in MDs. He knows what it’s like to come across as unflattering, practiced how to make eye contact the right way.
His mother said he had a terrible sadness inside him. His brother said Sam would not feel comfortable hugging me - but I knew he would give me a kidney if I needed it... He has spent the past seven months in the worst prison in the country.
I understand there has to be a sense that justice has been done. I think of the case of Stefan Irving - he was a predatory man who got only 21 years. Don't ruin the prime of this kind young man's life. Let him meet a partner and have a child. Sentence him to work hard and give it all away. Judge Koeltl wrote an article about Judge Weinfeld a few years ago about a white collar defendant who cast bread of charity on the water and then returned it. Sam has always been kind - let him reap the rewards. We ask that you sentence him with a compassionate heart.
Defendant SBF
I appreciate Mark's comment. What matters today is not my love life or hypothetical future children. There are clients, and I agree with Sunil for the most part, what they went through, obviously money they didn't expect to use, they were deprived of benefits. They had been waiting for a year and a half. What matters is my FTX colleagues, I destroyed everything they built. They are disappointed, and I'm sorry for that. I'm sorry for every stage of what happened, the things I should have done and said, the things I shouldn't have done. I care deeply about everything too. Remember those colleagues who followed me across the land, across continents, working until 2 a.m.... I remember, there were so many of them, Natalie was self-taught, running a media department, she did the work of ten people alone. I gave my brother a crazy idea about how to save lives. It seemed feasible. One day, Gary sent me a message with a link to a cryptocurrency exchange - the entire industry was being rebuilt on the model that Gary had created. Many of the things he built became industry standards.
Alameda was in danger of falling apart. I got an anonymous message telling me what I could do to fix it. It was clearly from Nishad, who is known for his humility. And Caroline, who is pretty amazing and almost entirely self-taught, asked me for advice on employee reviews. I read her review of someone and learned a lot. They put their heart and soul into it, and I threw it all away. It bothers me every day. I made a series of bad decisions that were not made out of selfishness. Those decisions, along with a number of other factors, ultimately led to the crisis.
Alameda wasn’t bankrupt, and neither was FTX — Alameda’s profits were gone, it was levered more than it should have been. We had to liquidate to deal with a run on FTX. And then we shut it down. FTX could have survived, Alameda didn’t. It was a couple of weeks of bad experience. I made a lot of mistakes, but that’s not the end of the story. Customers weren’t repaid, FTX didn’t survive. Yes, customers got conflicting statements. That caused tremendous harm. They could have been repaid. The assets were sufficient, it wasn’t because of the rise in crypto prices, that actually didn’t hurt, in fact the assets were sufficient. It was emotional pain, as Sunil said. Why weren’t they repaid? To be fair, there was a liquidity crisis, and that was partly my fault. This is not the time or the place to tell the full story.
Ms. Rolle in the Bahamas: A few days after the bankruptcy, our estate office was hacked. I was in the Bahamas that day. Christina Rolle came to FTX headquarters in person to make sure no further assets were lost. It was a Saturday and the work lasted until 3 am. It was really inspiring. There were indeed some people who stood up for their customers. But unfortunately, most people, including myself, let them down. As the CEO and leader of FTX, the ultimate responsibility lies with me. When things go bad, it doesn’t matter why, as CEO, everything is on me. At the end of the day, I am not the most important person... I think my useful life may be over. I have done the best I can, but I can’t do more from prison.
I have no say in the sentence I will receive, whether it's five years or 40 years. I understand how I am viewed by prosecutors, the courts, and the media. You mentioned my previous attempts to communicate with the general counsel. I was trying to help—but prosecutors and the media didn't see it that way. I want to respond to Sunil's previous comments. I understand what he meant, that we seemed to be in denial that there was suffering. It's understandable that people might interpret it that way. Our focus might not be in the right place. It's true that clients have been suffering.
Ultimately it seems that the client will be repaid based on the current value of the asset. The same is true for the lenders and investors. I wish I had done more to facilitate this, and I think I failed in this regard. I'm not sure why this happened, but I do think I did it wrong. There is an opportunity to do what I originally wanted to do for the world, rather than what I ended up doing. If everyone could do what they can for the world, I would like to see their success, not just the failure of people like me.
Prosecutor Roos
SBF stole $8 billion. This was a theft from customers all over the world. This was a loss that had a significant impact on people and caused harm. I want to respond to some of the new victims’ letters. They lost their life savings. A man living in Portugal - his daughter was born the day before the bankruptcy. He is haunted by the ominous shadow of financial instability and his daughter’s future. Then there is the 23-year-old from Morocco. He is the eldest son in his family. He kept his money with FTX not to lend it to the defendant, but for the safety of his family. And there is a couple in their late 60s who invested their life savings. They are frustrated and have to go back to work.
Mr. Mukasey said the defendant did not look his victims in the eye. I disagree. People look people in the eye through Twitter these days. Now, the defendant also took $1.7 billion from investors - that alone warrants a long prison sentence. Some people will get 40 years or more for that alone. And the lenders, two lenders went bankrupt. That also independently demonstrates the need for a severe sentence. And one of the largest bribes in history. He committed perjury. That is also widespread.
You have the defendant's cost/benefit analysis that would make him do it again. If SBF thinks the math is good enough, he will do it again. Today he talked about mismanagement, a "painful few weeks" - no acceptance of responsibility. He did not vow not to do it again. He talked about the opportunity to restart FTX or the equivalent. I think that tells the court exactly what might happen. A minimum of 40 years is needed here to ensure he doesn't do it again. Mr. Mukasey said the defendant is ethical...the defendant is not a monster, but he committed serious crimes that harmed many people - and he would consider doing it again. So the recommended sentence is 40 to 50 years.
Judge Kaplan
I considered the guidelines and the practicalities. Many of the statements about the defendant's background are indisputable. He was born into privilege, had loving and devoted parents, he had every advantage they could give him, he went to MIT. He was very intelligent, and he was autistic... He was a high-achieving autistic person. He was able to achieve tremendous things, but he was often socially awkward and had unusual, sometimes offensive ways of interacting with people. He went to Jane Street, made a lot of money, gave a lot away. There was testimony at the trial, I don't remember who said it, that people at Jane Street were encouraged to play the quantitative game. He was extremely ambitious and aware of his talent. Ms. Ellison confirmed that he was very ambitious. He talked about building two large companies, was very interested in politics, wanted to influence politics with his money. He said he had a 5% chance of becoming president one day. It was indeed a huge financial crime. He wanted to be a very influential person in his country politically. This was not just on the left end of the political spectrum.
He set up a vehicle to get donations to the right through proxies that would not come back to him. These actions, at one point, could have been considered part of his self-presentation as supporting proper regulation of the crypto industry. It was a performance, in my opinion. Eventually he admitted it. On November 15th or 16th, he was interviewed by a reporter he knew well, and the reporter said, you talk a lot about good regulation - is that just a PR move, too? He said, "Yeah, screw the regulators."
When asked how the defendant would characterize his view of risk, Caroline Ellison responded: He said he was risk neutral and comfortable as long as the expected value (EV) was positive. A man who would flip a coin to decide whether life on Earth would continue. SBF knew that Alameda was using client funds for risky investments, political contributions, and Bahamian real estate. Those funds were not his to use. One of his more succinct expressions, I think, was “I screwed up.” SBF had the right not to plead guilty and go to trial. Everyone has that right, and I don’t blame him for it. But I go back to Ellison’s testimony. He knew it was wrong. He wouldn’t admit to anything. That was his right. Specific deterrence? His name is mud all over the world. But he persevered, and he’s a great marketer. Mr. Roos correctly points out that the outlines of SBF’s revised version are clear.
Even after his arrest, he used the same skills to sell his story to a large number of media people. He has the right, we talked about this... In general deterrence, ultimately the criminal justice system can only survive if it is seen as fair. People need to feel that it is fair. Otherwise, we are back to trial by combat, friends, or something like that. Therefore, the punishment must match the severity of the crime. This.. is.. a.. serious.. crime. Please bear with me.
The defendant, please stand up and accept the verdict... [SBF stood up, and his three lawyers also stood up]
I know the probation department recommended 105 years, and the government recommended 40 to 50 years. That would be more than necessary. I'm not minimizing the harm. The outrageousness of his behavior. His extraordinary flexibility with the truth. His obvious lack of any remorse. I want to add one more thought. I don't think it's a productive approach to spend time detailing every lie -- when he's not lying, he's dodging questions, nitpicking, trying to get prosecutors to restate questions for him. I've been doing this for almost 30 years. I've never seen anything like it.
The court ruled that SBF was sentenced to 240 months, followed by 60 months consecutively, for a total of 300 months (25 years).
