On Thursday, the poster boy for crypto fraud will appear one last time in New York federal court, where a judge will decide how long to send him away. As we await the outcome, there are two questions on my mind: How many years will Sam Bankman-Fried have to serve? And how can Bankman-Fried and his law professor parents—smart people by all accounts—be so stupid?
I’ve been thinking about this second question for a while. It occurred to me again in the last few days as the Bankman-Fried clan made clear they think he should get off lightly because, well, he didn’t really do anything wrong. In their telling, one of the largest financial frauds in U.S. history occurred because Sam got in a little over his head but the judge should go easy on him because he’s kind of an odd guy and, thanks to a bounce back in the crypto markets, no one really got hurt.
This last part is nonsense of course. Plenty of people got hurt by Bankman-Fried’s massive fraud—just ask the investors who Bankman-Fried ripped off for billions, the FTX customers who won’t get the full value of their crypto, or the nonprofits that had been promised grants but never got them because the whole thing was a Ponzi scheme. As for the stranger features of Bankman-Fried’s personality, he himself has admitted that his apparent eccentricity was cultivated to further his con game.
This brings us back to my original question of how Bankman-Fried and his parents can be so stupid. Instead of owning up to the very bad things he did, they have grasped at excuse after excuse. You don’t need to be a law professor or a genius to know why this is a bad idea. Anyone who has watched TV knows that, when you do bad things like fraud, the best thing to do is express remorse, and tell the judge you will change your ways. In fact, Fortune Crypto has an op-ed to this effect today from someone who did time for a $3 million fraud charge. But for some reason, Bankman-Fried seems to believe different rules apply to him. We saw this when, prior to his trial, he leaked his ex-girlfriend’s diary to the media and got his bail revoked for witness tampering. What did he think would happen? What does he think is going to happen after he’s failed to express real remorse prior to his sentencing? He still doesn’t get it.
We should know Bankman-Fried’s fate by this afternoon—my colleagues Leo and Niamh will be at the courthouse and have a report. As for how much time he will serve, prosecutors are asking for 40 to 50 years while Bankman-Fried’s lawyers are asking for a laughable 6.5 years or less. Meanwhile, since this is crypto, there is a token-based prediction market where most bets range from 20 to 50 years. Put me down for 30 years.
Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts
DECENTRALIZED NEWS
A judge refused to dismiss the SEC's claims against Coinbase, rejecting the exchange's fair notice claims and invocation of the major questions doctrine. (Fortune)
Marc Andreessen, Galaxy Digital, and others invested $75 million in a new fund that bets on consumer crypto applications—the latest sign of a crypto VC resurgence. (Bloomberg)
British Columbia filed an "unexplained wealth order" to seize gold bars, cash, and watches from a safety deposit box belonging to the cofounder of the scam exchange Quadriga. (CBC)
Some FTX creditors are grousing that the bankrupt firm's caretakers never followed through on plans to reboot the exchange despite spending millions on the idea. (WSJ)
The new BlackRock fund that gives investors blockchain tokens representing investments in cash and T-bills has pulled in $240 million since its debut last week. (Bloomberg)
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