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Former 'Crypto King' Sam Bank Man-Fried to be punished

The individual known as Sam Bank man-Fried, a former prominent figure in the cryptocurrency industry who was found guilty of fraudulent activities and money laundering in the previous year, is scheduled to face a sentencing hearing in New York on Thursday.

 

The 32-year-old will undoubtedly be incarcerated; however, the duration of their imprisonment remains uncertain.

 

The occurrence has reignited controversy on the magnitude of his transgressions - and the appropriate course of punishment.

 

The defence team has requested mercy. However, the prosecution is pursuing a jail sentence of 40 to 50 years.

 

Such a penalty is justified for an individual who deceived investors and banks and embezzled billions of dollars from users of his crypto exchange, FTX, which is now in bankruptcy.

 

The defence team has put out a proposal ranging from five to 6.5 years, alleging that the government is embracing a "medieval perspective on punishment" by advocating for an extended period of incarceration for an individual who has committed a non-violent offence for the first time.

The inquiry has elicited a substantial volume of correspondence from former FTX clients, relatives, acquaintances of his parents, and even unfamiliar individuals, all endeavouring to influence Judge Lewis Kaplan, the federal court responsible for determining his destiny.

 

"Given his lack of remorse, it is perplexing why any judge would exhibit mercy." Sunil Kavuri, a British investor with assets over $2 million at the time of the exchange's collapse, and one of the individuals rallying former clients to testify in court.

 

The collapse of FTX in 2022 was a remarkable downfall for Bank man-Fried, who had achieved billionaire status and became a prominent figure in the corporate world by endorsing the company, which provided a platform for individuals to deposit and trade cryptocurrencies.

 

Before the occurrence of a run on deposits, the company managed to acquire millions of consumers due to reports of financial difficulty.

 

In November 2023, a US jury determined that Bank man-Fried had embezzled billions of client funds from the exchange before its collapse, intending to purchase real estate, make political contributions, and allocate the funds for other financial purposes.

 

Many customers are now positioned to regain substantial amounts as part of a strategy formulated in the distinct bankruptcy proceeding.

 

According to the plan, previous clients would be eligible to receive compensation depending on the value of their assets at the time of the exchange's failure.

 

The defence for Bank man Fried, who is anticipated to appeal his conviction, has said in court documents that the extent of his recuperation justifies a reduced term.

 

According to them, "money has consistently been accessible," which would have been unattainable if [FTX's holdings had vanished into Sam's finances.

 

However, the payback method has elicited significant dissatisfaction among former consumers since it deprives them of the opportunity to benefit from the subsequent cryptocurrency recovery.

 

In his statement to the court, John Ray, the lawyer who guided FTX through bankruptcy and criticised Bank man-Fried, acknowledged the problems.

 

"It is important to note that customers, non-governmental creditors, governmental creditors, and non-insider stockholders have experienced and are still experiencing negative consequences," he said in his letter to the court. He contended that the assertions of minor loss were indicative of Bank man-Fried's persistent adherence to a deceptive mindset.

 

According to interviews conducted by the BBC, former FTX clients expressed dissatisfaction with the hasty disregard for their issues and strongly encouraged the court to decline appeals for mercy.

 

"The individuals making this statement are not in a similar situation to mine, where they have suffered complete financial loss," stated Arush Sehgal, a 38-year-old technology entrepreneur residing in Barcelona. Sehgal, along with his spouse, is one of the largest individual creditors of the exchange, holding approximately $4 million worth of savings in both dollars and bitcoin at FTX during its collapse.

 

He is a plaintiff in the ongoing bankruptcy lawsuit, alleging that the new bankruptcy plan constitutes a "second offence" against Bankman-Fried's clientele.

 

Angela Chang, a 36-year-old software professional from Vancouver, said she had around $250,000 in dollars placed with FTX at its collapse. She expressed concern that the damage inflicted upon FTX clients was being downplayed due to their involvement in the cryptocurrency sector.

 

"People see cryptocurrency as illicit. Hence, they exhibit empathy towards this individual... "However, I am not involved in criminal activities," she said, recounting how the company's collapse plunged her into melancholy and resulted in her accumulating credit card debt. Confronted with a need for funds, she eventually sold a fraction of a privilege to an investor.

 

According to Daniel Richman, a professor of Columbia Law, the magnitude of the crime in question is seldom subject to such intense debate.

 

However, he said that other factors often influence choices, such as a judge's perceptions of the offender and the necessary measures to prevent future criminal behaviour.

 

Judge Kaplan, an experienced judge with a track record of overseeing prominent trials involving notable individuals like Donald Trump and actor Kevin Spacey, has already demonstrated doubt regarding Bankman-Fried's conduct. Last year, he revoked his bail after determining that he was attempting to intimidate other witnesses.

 

According to Professor Richman, judges and lawyers widely acknowledge that a crucial step for defendants before being sentenced is to demonstrate a genuine commitment to their actions, exhibit sorrow, and demonstrate a certain level of self-awareness about their offence.

 

"Not only did the defendant go to trial, but the judge also believed that the defendant was obstructive before the trial," he said. He also stated that it would be much unexpected for court Kaplan to impose a punishment similar to the defence's request.

 

Since the 1980s, the United States has substantially extended the duration of its official guidelines for incarceration for those involved in white-collar offences.

 

According to Prof Richman, judges often deviate from the rules, resulting in significant variation. However, there is a higher likelihood of severity in high-profile cases compared to other nations.

 

In her plea to the court, Barbara Fried, the mother of Bank man-Fried and a former professor of law, highlighted the punitive characteristics inherent in the United States judicial system, positioning it as a notable anomaly within the realm of democratic nations.

 

"I am fully aware of the transformative potential of prisons," she said. The prolonged period of incarceration will have a detrimental impact on Sam, comparable to the consequences of capital punishment.