The Journal. - What Will Sam’s Sentence Be? from "The Trial of Crypto’s Golden Boy"

Episode Date: March 27, 2024

Caitlin Ostroff and Rachel Humphreys dive into a mountain of court filings to understand the arguments that will be made at Sam Bankman-Fried’s sentencing hearing. His defense team is arguing for a 6-year sentence, but the government thinks Bankman-Fried should serve 40 to 50 years. Which side will win out? Further Listening: - The Trail of Crypto’s Golden Boy  Further Reading: - Sam Bankman-Fried Faces Lengthy Sentence-And Long Odds On Appeal  Learn more about your ad choices. Visit megaphone.fm/adchoices

Caitlin, are you excited for another early start tomorrow morning? You know, the 3 a.m. wake-ups are the things that really motivate me for life. The 3 a.m. wake-ups and the long standing around outside the Southern District of New York courthouse. I just hope it's not raining. We are not that lucky. I just hope it's not raining. We are not that lucky. I think we've established that through the course of this podcast. But we are going to be lining up outside the courthouse for an interesting day because we're going to find out how long Sam Bankman-Fried's sentence is. His lawyers say he should serve around six years, but the government thinks he should serve around 40 to 50, which is

a big difference. Yeah, it's a huge difference. And the big question will be, you know, how does that play out in court? And we've gotten a peek at some of the arguments that we'll be hearing in a bunch of filings that have been consuming my time for the last couple of weeks. And so the details in there are insane. A lot of them have surprised even me, despite all of the other craziness. And so it's going to be really interesting. Yeah, this is going to be a fascinating closing chapter to the Bankman-Fried story. From The Journal, this is the trial of crypto's golden boy. I'm Caitlin Ostroff.

And I'm Rachel Humphries. This is the trial of crypto's golden boy. I'm Caitlin Astroff. And I'm Rachel Humphries. Coming up, the dueling arguments over Sam Bankman-Fried's sentence. Attention all soccer fans. We'll see you next time. delicious food, and diverse cultures. You'll love it so much you'll want to extend your stay beyond the matches. Get the ball rolling on your soccer getaway. Head to visittheusa.com. Okay, Caitlin, let's get into it. What is sentencing? How does it work? Yeah, so sentencing is going to feel and look very different from when we were at trial. For one, there is no jury. And so it is all up to the judge as to what Bankman-Fried's sentence

will be. And so we're going to have Bankman-Fried's lawyers, prosecutors, and, you know, reporters like us in the courtroom, and we're going to be watching the two sides try to convince Judge Lewis Kaplan what is the sentence that Bankman-Fried deserves. And as part of that, we'll likely get these testimonials from both sides. On Bankman-Fried's side, sort of these character witnesses, possibly even his parents, and on the prosecutor's side, sort of these character witnesses, possibly even his parents, and on the prosecutor's side, victims of FTX. And I think one important thing here is to consider just how much power Judge Kaplan has on this day. He could sentence Bankman-Fried to no prison time, or he could assign him potentially 100 years. And as we know,

Judge Kaplan can be unpredictable. So let's talk about what we know, which actually is quite a lot. And that's because in advance of this, both Bankman-Fried's team and prosecutors have filed memorandums ahead of the sentencing, basically outlining what they think is a fair sentence. Yeah, and let's start with Bankman Freed's lawyers. They're making the case for a five or six year sentence. Basically, they're asking Judge Kaplan for leniency. And something that I just want to bring up that caught my eye is that they open with a quote from none other than Abraham Lincoln. And the quote is,

I don't like that man. I must get to know him better. Basically implying that we don't know who the real Bankman Freed is. Right. And they spend quite some time in their memo outlining Bankman Freed as a selfless, altruistic person who has dedicated his life

to try and help those less fortunate. And they talk about him as a philanthropist who wasn't motivated by greed like the government alleges. And they cite a number of the letters that were written to support Bankman Free, some of which we talked about in the previous episode. And one of those letters says, quote, he has great gifts to offer the world. And that's one of the gist of the argument. He's a young man. He still has so much more to give. Right. And that the Bankman Freed that everyone saw at trial isn't really the whole picture of who he is. Yeah. And another argument his lawyers make for a shorter sentence is that they say Bankman-Fried didn't, in fact, cause FTX customers to lose any money in the end.

Right. And that's because the FTX bankruptcy team has been able to recover enough money from when FTX collapsed through clawbacks and asset sales. And so they're going to be able to pay back customers what they're owed. And that's what Bankman-Fried's lawyers are arguing, at least but the government disagrees and we're going to talk about why in a bit. But back to Bankman-Fried's defense and why they think he should get some leniency, they're saying prison could be an especially risky prospect for him, aren't they? Yeah, they get into these arguments that Bankman-Fried has autism spectrum disorder, and they contend that being in prison requires a lot of sort of reading of body language and social cues from both inmates and guards in facilities. And they say that Bankman-Fried could misconstrue some of these

cues, and that can make him vulnerable to abuse. The other argument the defense makes is that Bankman-Fried has anhedonia, which is a word I've never heard of before. I hadn't either, and it basically means the inability to feel joy and pleasure. And why that's relevant is because during the trial, the government painted a picture of Bankman-Fried as enjoying time with celebrities like Katy Perry and Tom Brady living in this luxury penthouse in the Bahamas. And his lawyers are arguing that Bankman-Fried doesn't derive pleasure from anything at all and therefore isn't motivated by these things. And to support this argument that she submitted some documents some of which are bankman freed's own personal writings for example they include something he wrote when he was working in new york

in 2016 and it's quite sad and very reflective you know he describes new york as lonely and he says quote i feel nothing but the aching hole in my brain where happiness should be. And he ends with a poem, which is pretty abstract in places. He talks about wearing war paint and emotional detachment. I'll read a few lines from it, but I should preface that I am not a poetry reader. So apologies if this goes badly. Give it a go, Caitlin. He writes,

I'm at dinner, checking phone calls. Texts and blogs, I don't hear a word. I know nothing at all, just concerned about the world. Gosh, it's pretty bleak, actually. But we should say that we have no clue to the context of these writings. All we know is this is something Bankman-Fried wrote eight years ago before he founded FTX. So that's the defense team's argument for a roughly six-year sentence. We'll talk about why prosecutors think Bankman-Fried should serve decades behind bars next.

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good things come to those who plan ahead. Family vacay? Reserve your ride as soon as you book your flights. To all the planners, now you can reserve your Uber ride up to 90 days in advance. See Uber app for details. so last friday the government released a sentencing memo basically giving their arguments as to why bankman freed should spend 40 or 50 years behind bars and like this sentence the document is very long yes i was delighted to see this big document appear in the filings. And I took a look through it and I will summarize it as best I can. Essentially, the government is arguing that Bankman-Fried should face a longer sentence, basically using the arguments they made during the trial. So they begin by talking about the sheer scale of Bankman-Fried's fraud of at least $10 billion. Right. And we heard during the trial that Bankman-Fried made these decisions over the

course of years. And so the prosecution is saying, you know, he could have stopped at any point. Yeah. And the government also brings up the impact his crimes had on victims. There are 63 victim impact statements, and they pull quotes from a bunch of them. There's one from a woman, for example, who put the money she received in compensation for a car crash on FTX. And after the collapse, she says she was very depressed and suicidal.

And there's one line from a victim that really stood out to me, which says, we, the victims, are not abstract entities represented by figures in a bankruptcy filing. We are individuals whose lives have been irrevocably altered. Right. And I mean, during the trial, we heard from a couple of victims, but this is kind of the most we've ever seen from the victims impacted by FTX's collapse. And to me, all of the victim

statements were really striking. And the victims are from all over the world, countries like Nigeria, Morocco, and Argentina. And one person who left Ukraine during the war, but he sent all of his savings to FTX. Yeah, it's a real reminder of just how huge FTX really was and just how big its reach was. Yeah. And these statements are the government's pushback against what Bankman Freed's lawyers argue, which is that customers are made whole. And while that's technically true, customers are getting back dollars. They're not getting back the cryptocurrencies like Bitcoin that they had in their accounts. And generally, crypto has gone up a lot in value in the last couple of months.

And the government argues that because of Bankman-Fried's crimes, victims were denied those gains. And the government also then moves on to explain why long sentences needed to protect the public. And I think this can be summed up by one word, recidivism, which basically means the tendency of a convicted criminal to re-offend. Yeah, and the government has strong concerns that Bankman-Fried will do just that.

They say that it's conceivable that if he's released from prison, he's going to start anew, maybe launch another crypto exchange. He's released from prison. He's going to start anew, maybe launch another crypto exchange. And they attached a document that Bankman-Fried wrote after FTX declared bankruptcy and he was indicted. And in it, Bankman-Fried is kind of musing ideas about how he could restore his image. Yeah, something Bankman-Fried, we learned during the trial, thought about quite a lot. And some of the ideas he came up with were pretty wild. He was thinking about coming out as a Republican in an interview with Tucker Carlson. Now, remember, before the FTX

collapse, Bankland Freed had been known to be a big Democratic donor. And he was also thinking about pushing out a Twitter poll, asking people what he should do. Yeah, I'm not sure how much those responses would have helped him or how much he might have wanted to act on Twitter responses. But what's interesting is that between these two sides, we get these two very different arguments with Bankman Freed's own writings at the center.

And, you know, there's this debate over what his intention was in writing them, what they mean. And it's going to be ultimately up to Judge Kaplan to decide which side is right, which side is most convincing. Yeah, which is the real Bankman-Fried, basically. And one thing we don't know right now is how these arguments will be made in court tomorrow. You know, how will Bankman-Fried's new lawyers perform? What impact will statements make? You know, we could hear from

Bankman-Fried's parents. We could even hear from Bankman-Fried himself. And I think it's going to feel like a mini trial. I think especially if we get Bankman-Fried, it's going to have very strong last year vibes. But with that, Rachel, I will see you at 3 a.m. Okay. That's all for today, Wednesday, March 27th. The trial of Crypto's golden boy is part of The Journal, which is the co-production of Spotify and The Wall Street Journal. I'm Caitlin Ostroff.

And I'm Rachel Humphries. Thanks for listening. Check back here for sentencing updates.