FTX Creditors Expected to Receive Full Repayment, Will FTX Founder SBF Face Lesser Charges?

FTX Creditors Expected to Receive Full Repayment, Will FTX Founder SBF Face Lesser Charges?

FTX Creditors Expected to Receive Full Repayment, Will FTX Founder SBF Face Lesser Charges?

Sam Bankman-Fried (SBF), the founder of bankrupt cryptocurrency exchange FTX, is expected to stand trial next month. Due to the significant rise in the cryptocurrency market, creditors may receive full repayment, which could potentially result in a lighter sentence for SBF. CoinDesk interviewed several lawyers to discuss the potential impact of debt repayment on SBF’s sentencing outcome.

Will SBF’s sentence be shorter than expected?
Due to the rebound in the cryptocurrency market and the appreciation of certain investments held by FTX exchange, creditors may receive full repayment (the amount of the debt claim is expected to be calculated based on the asset price on the day the company filed for bankruptcy protection). This may affect the sentencing of SBF, who has been charged with multiple counts of fraud, in the trial next month.

The rise in the cryptocurrency market is significant for the sentencing, as compensation to the victims is a consideration during sentencing. For example, for low losses, the sentencing guidelines suggest a range of 24 to 30 months, while according to Jordan Estes, a partner at Kramer Levin’s New York office, higher losses could result in severe sentences, with a possible term of over 20 years or even life imprisonment.

Estes expects the amount of losses to be a focal point of debate during SBF’s sentencing. She stated to CoinDesk that in the sentencing guidelines in the United States, provisions for reducing the defendant’s sentence based on the amount of restitution to the victims only apply to cases where the restitution has been made prior to the discovery of the crime. In SBF’s case, it is evident that he has not made these repayments, and the payments will only be made long after the crimes were discovered.

A possible similar case is the well-known financial fraud case of Bernie Madoff, where the bankruptcy trustee also recovered large amounts of stolen funds, but he did not receive any reward as a result.

SBF may still face a severe sentence. According to Martin Auerbach, a lawyer at international law firm Withers, judges in the Southern District of New York typically impose sentences below the guideline range in white-collar criminal cases (now that the sentencing guidelines are advisory rather than mandatory, sentencing is easier), but when the court deems the crimes to be extremely heinous, they can still impose punishments that exceed the guideline recommendations.

Related reports: “FTX Abandons Relaunch of Exchange, Expected to Fully Compensate Cryptocurrency Customers” and “Jury Unanimously Convicts SBF on Seven Counts of Fraud and Conspiracy”.