Sam Bankman-Fried’s protection crew argued the U.S. Division of Justice was misapplying authorized precedent in arguing for a prolonged jail time period.
The DOJ urged a sentence of 40 to 50 years, versus the protection’s request for roughly 6 years, for the previous FTX CEO.
Sam Bankman-Fried’s legal professionals have pushed again in opposition to a number of the authorized circumstances cited by the U.S. authorities in its sentencing memo, which makes the case for why the Division of Justice assume the previous FTX CEO must be handed a sentence within the vary of 40-50 years, a court docket submitting on Wednesday mentioned.
Bankman-Fried’s authorized crew already responded to the Division of Justice’s memo in a letter earlier this week, arguing the DOJ was making an attempt to make the previous FTX CEO out to be a “tremendous villain.” In one other letter Wednesday, the protection crew took goal at a number of the authorized arguments offered by the prosecution.
Bankman-Fried was discovered responsible of fraud and conspiracy final yr and will likely be sentenced on March 28. His protection attorneys argue a sentence of not more than 6.5 years is acceptable, given FTX collectors will recoup their losses, whereas the DOJ has argued for 40 to 50 years. A presentence investigation report beneficial 100 years, although that is doubtless solely because of the loss on the time FTX filed for chapter (north of $8 billion).
One of many contentions seems to be in regards to the interpretations of a “precedent-setting” U.S. Supreme Court docket case, Kisor v. Wilkie, which was no less than partly about whether or not punishment must be based mostly on meant loss or precise loss, the Wednesday submitting mentioned.
The federal government argued that Bankman-Fried’s makes an attempt to make the sentencing court docket observe the definition of “loss” based mostly on the Supreme Court docket’s reasoning in Kisor v. Wilkie must be rejected.
“The Second Circuit and district courts inside this Circuit have, even after Kisor, constantly utilized the commentary on ‘meant loss’ when calculating the Tips vary,” the DOJ mentioned.
Bankman-Fried’s authorized crew retorted by saying that “all the federal government cites is a single, unpublished, non-precedential abstract order from the Second Circuit that quotes a call from 5 years earlier than Kisor, that didn’t think about this Kisor argument, and that in the end utilized precise as an alternative of meant loss.”
Bankman-Fried’s legal professionals have argued that the “hurt to prospects, lenders, and traders is zero” and thus a most sentence of 6.5 years in jail must be thought of. On Wednesday, present FTX CEO John J. Ray III referred to as that declare that prospects misplaced “zero” cash within the trade’s 2022 collapse, “categorically, callously, and demonstrably false.”
The query of loss ties to FTX’s former prospects, who are actually the bankrupt trade’s collectors. The trade’s chapter crew, which is led by Ray, now estimates that these prospects may obtain nearly all of their property’ worth as of the date of FTX’s chapter in November 2022. A part of this comes from recoveries Ray’s crew secured over the previous yr and a half, whereas a few of that worth could also be attributed to the current rise in crypto values.
Sufferer influence statements from FTX prospects argue that whereas they could obtain their 2022 values, they may have missed the upside from crypto’s value rise over the previous yr.
Losses are only one issue that Decide Lewis Kaplan, who’s overseeing Bankman-Fried’s case, must weigh as he considers what sentence to impose. Different elements embody proof offered at trial, the character reference and sufferer influence statements submitted by each the protection and prosecution and even attainable testimony throughout subsequent week’s sentencing listening to, mentioned Tama Kudman, a companion at Kudman Trachten Aloe Posner LLP.
The presentence report, which beneficial 100 years, is a “mechanical calculator … what [the report’s writers are] saying is ‘in consulting tips, that is the conclusion,'” she informed CoinDesk.
“What the protection is saying to the choose is, ‘look, this can be a nonsensical, draconian [sentence],'” she mentioned. “Their argument is that this guideline calculation is incorrect as a result of there was actually no precise loss to the sufferer, if you happen to have a look at loss on the time of the crime.”