In a recent sentencing memo, Sam Bankman-Fried’s defense team challenged certain aspects of the legal reasoning applied by the United States government. The Department of Justice (DOJ) suggested that the former CEO of FTX should receive a 40 to 50-year prison sentence. This position was articulated in a court document disclosed on Wednesday.
Earlier in the week, Bankman-Fried’s lawyers issued a response to the DOJ’s memo, labeling attempts to portray him as a “super villain.” Following this, on Wednesday, they instituted a challenge to specific legal arguments put forth by the prosecution.
Last year, Bankman-Fried was convicted of fraud and conspiracy. His sentencing is scheduled for March 28. His attorneys are advocating for a maximum of 6.5 years in prison, pointing out that FTX creditors are on a path to recovering their losses.
This stands in contrast to the DOJ’s argument for a significantly longer sentence. Notably, a presentence investigation report suggested a 100-year sentence, reflecting the substantial losses exceeding $8 billion reported when FTX declared bankruptcy.
A central point of dispute concerns the interpretation of the Supreme Court case Kisor v. Wilkie. The debate focuses on whether sentences should be based on the intended or actual loss.
The DOJ insists that Bankman-Fried’s efforts to persuade the sentencing court to adopt the Supreme Court’s definition of “loss” should be disregarded. Despite this, the DOJ has stressed that courts within the Second Circuit have consistently applied the concept of “intended loss” in determining sentencing guidelines, even post-Kisor.
Bankman-Fried’s legal team criticizes the government’s reliance on a singular, unpublished, and non-precedential order from the Second Circuit. This order predated the Kisor case and did not consider the arguments it presented, ultimately focusing on actual rather than intended loss.
Meanwhile, current FTX CEO John J. Ray III has directly challenged Bankman-Fried’s claim that the collapse of the exchange in 2022 resulted in no losses to customers, lenders, and investors. In a letter to Judge Lewis Kaplan dated March 20, Ray highlighted the significant impact on FTX and its creditors. He aimed to rectify “material misstatements and omissions” in the sentencing submission from Bankman-Fried’s side. Ray’s critique follows Bankman-Fried’s legal team’s argument against the proposed 40 to 50-year sentence, calling it excessively severe.
