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The Commodity Futures Trading Commission (CFTC), the SEC, and more are investigating Sam Bankman-Fried. But, it is his criminal prosecution in the Southern District of New York that will take precedence.
“SBF”, as many know Bankman-Fried, has already appeared in court for his arraignment, where there was a key question: guilty or not guilty? In most cases, a criminal defendant at this stage of the proceeding pleads not guilty. Probably to the chagrin of his lawyer, Bankman-Fried has loudly maintained his innocence on social and mainstream media. Despite his not guilty plea, he can continue negotiations with the Justice Department and Manhattan prosecutors, which could result in a deal at any time.
Criminal proceedings have a duration of life, beginning with the investigation. In the case of FTX, the investigation began at least in early November during the crash of the cryptocurrency exchange.
Investigators, prosecutors, and agents moved quickly to gather facts and evidence to present before a grand jury, which is similar to a trial jury, a group of peers that ultimately decides to deny or approve charges. The decision had already been made that Bankman-Fried would not be arrested until his case is resolved, so he is out on bail at his parents’ home in Palo Alto, California.
Federal sentencing guidelines will play an important role in Bankman-Fried’s criminal prosecution, as they do in all of those cases. Sentencing guidelines often drive results.
To be sure, while federal sentencing guidelines used to be binding on judges, the Supreme Court ruled that it was unconstitutional for the legislature or executive to handcuff the judiciary, arguing that judges should make their own decisions. Most judges follow the sentencing guidelines, which look at the charges, the amount of fraud involved, and more.
In the case of FTX, we have seen a lot of numbers. $8 billion has been floated. Federal sentencing guidelines recommend life in prison for Bankman-Fried. Therefore, if Bankman-Fried goes to trial and there is a guilty verdict, he could receive life in prison. The only way Bankman-Fried could overturn the sentencing guidelines would be to plead guilty and cooperate with the government.
In recent months, investigators and prosecutors have surely tried to build an airtight case with the best evidence they can muster. They have reviewed transaction data and thousands of documents, including emails, Slack messages, text messages, etc.
But, the best evidence they have obtained is the witnesses, who can put a jury in a specific place at a specific time and tell a story. Part of the job of a prosecutor or trial attorney is to take complex ideas, the inner workings of a non-transparent financial institution, and make them identifiable to the jury; witnesses help with that task.
Unfortunately for Bankman-Fried, two top FTX executives are working with the authorities. Former Alameda Research and FTX executives Caroline Ellison and Gary Wang have pleaded guilty to criminal charges related to FTX’s multi-billion dollar fraud. They will play a significant role in the government’s case, revealing details they were privy to due to their roles.
Bankman-Fried can cooperate in other ways besides revealing what happened behind the scenes at FTX. Prosecutors sometimes take a victim-centered approach, which focuses on making victims whole. Perhaps Bankman-Fried can point prosecutors in the direction of funds for people to recover or provide law enforcement with advice that will help in other cases to minimize your sentence.
If Bankman-Fried decides to plead guilty and take a deal, prosecutors will need to strike a fair balance. Even if they plead guilty, people must be punished, particularly for stealing billions of dollars.
Prosecutors are likely to ask Bankman-Fried to plead guilty to at least one of the most serious charges and then go to the judge to get him diverted down, which involves asking the judge to depart from those federal criminal prosecution guidelines. judgment based on substantial assistance to the government. .
A witness will have accepted responsibility, aided the prosecution, and made an effort to assist with restitution for the victims. A request for a prosecutor to step down can be ambiguous, and simply a request for a judge to use her discretion, or it can be very specific, requesting a certain amount of time.
Regardless of whether he pleads guilty or is found guilty, all aspects of Bankman-Fried’s life will come to light at sentencing, and a judge could take into account age, health issues and more. Victims will also have their input in the form of a victim impact statement, either in writing or in court. That Bankman-Fried is so young could work against him or for him.
It is difficult to predict the results in criminal cases. But, as the evidence against SBF becomes clearer, the former FTX CEO may be inclined to call for the life sentence to be removed.
About the Author: kadan stadelmann is a blockchain developer, operations security expert, and CTO of Komodo Platform. His experience ranges from working in operations security in the government sector and launching technology startups to application development and cryptography. Kadan started his blockchain journey in 2011 and joined the Komodo team in 2016.
