Nov 6, 2023

FTX founder Sam Bankman-Fried was found guilty by a jury on all seven counts of fraud in federal court.

Video transcript

Sam Bateman Fried's conviction on seven counts of fraud in federal court is another step in the long running FTX saga reaching a conclusion. Joining us now to discuss this coin desk global policy and regulation and managing editor Nick Day, who's also the editor of Coin Desk State of crypto newsletter. Good morning, Nick. Hey, good morning. It's just me and you this Monday morning, Emily and Lawrence have the day off, but we got a lot to talk about and a lot to unpack the question now is what does this verdict mean for the industry at large? What have you been hearing out there? You know, it's kind of funny, right? Because on the one hand, the actual charges, as you know, even prosecutors sought to emphasize, um, it's fraud. You know, there's a lot of, a lot of the things that they accused Beman Fried of doing crypto was the vehicle, but it wasn't necessarily like, you know, it's not like he rug pulled a token or whatever, right? It's not despite the same as like an actual, you know, pure crypto primates, he set up a company, he took customer funds, he took it. So I feel like a lot of the crypto industry has been kind of responding with relief almost, you know, because this is, you know, in their view, not a super crypto related thing. Uh ignoring, of course, the one giant elephant of crypto being at the heart of what happened here. Uh But I think a lot of people are kind of relieved at that. Did you see also a lot of uh you know, other voices who are maybe not as into crypto who are still saying like, yeah, this is a sign that the crypto industry made it so easy and you know, that is a, you know, sign that it's still uh you know, easily corruptible or useful for criminals and oh, you know, malicious actors. So a lot of mixed results, but mostly I think people are just saying like, OK, well, yeah, you know, he stole a billion dollars and he's going to go to jail or go to prison. Yeah, Nick, I think you just highlighted this education gap that we speak about so much in the industry. Folks who are maybe not familiar with crypto, see this as a crypto story because crypto is at the heart of it. But as you know, folks in the industry have said fraud illegal. There are laws in place to deal with this. No new legislation is needed and now he's been convicted on all seven counts. Let's talk about what's going to happen next. Judge Lewis Kaplan set sentencing for March 28th. That's when the hearing is going to happen. What happens between now and then if anything and what can we expect to happen in March? Yes. So first of that March 28th date is tentative. So normally what happens and what it seemed like they discussed at the end of the trial on Thursday is before you get to a sentencing decision, the Office of Pretrial Services and other things, you know, creates a memo. They basically say, ok, here are the alleged crimes, here are the factors that you know, we are looking at and there's a, you know, detailed document out there that lists what the guidelines are, you know, X crimes result in Y you know, years recommended certain activities or actions lead to what they call enhancements. So the Office of Pretrial Service is going to create this document memo saying, ok, here's how many years of prison we recommend. Uh you know, based on everything we have seen the record from the trial, the, you know, alleged crimes, the severity, the money involved, et cetera, then the defense and the DOJ are both going to weigh in, they're going to have their own views. The defense is obviously going to say, well, that's too much time. We think that this is, you know, unfair that no one was killed or whatever. So we want fewer years. The doj you know, unclear to me what they'll say but probably some version of the opposite of what the defense will go for. Uh And then, yeah, right now there's a tentative date for March 28th. But the complicating factor here is, uh there is a second trial scheduled for March 11th on a number of other charges that Ban Manfried was accused of across the last couple of months. These charges were severed from the original case for reasons tied to basically, uh you know, the treaty with the Bahamas under which Ban be fee was uh you know, brought here extradited to the US. Um We have until February for the doj to, you know, give a decision to the judge saying, ok, we're going to pursue these charges. We're going to drop these charges because we've already nailed him on the other set and we don't need to do a second trial or maybe they'll say, hey, we need a little bit more time to think about this. Either way if that second trial is held, I imagine it'll be the first trial is going to get pushed back because you know, why do two of the sentencing procedures if you can just wrap it up in one nick. Some of the legal analysts and experts we've had on the show have predicted that Sam will get um somewhere in the double digits of years in prison when it comes to sentencing. Uh when you're talking to your sources in your reporting, is that kind of what people are saying that you're talking to as well. Yeah, the range seems to kind of really live between like 2030 something years. Uh, I haven't seen anyone predict, uh, more than that. Um, of course, we've seen all the headlines and everything about 100 and 15 years or 100 and 10 years in prison. But that's based on if all of the charges were taken consecutively. But my understanding is that judges usually don't go for that. They'll say, ok, well, you know, these are seven different charges but the alleged, you know, conduct at the heart of them is all the same. And so it's really just one crime kind of charged seven ways. So, uh yeah, see the 20 to 30 less than 40 range is what everyone I've spoken to says, um, no one really kind of, you know, we've had one or two outliers on either extreme. Some people say, or one person said 51 person told me like 50 ish. But, you know, I think most people have been within that 20 to 4020 to 30 something range. All right, Nick, thanks for joining the show this morning as always, it was a pleasure. Thank you. That was Quin Desk Global Policy and Regulation managing editor Nick Day. And it's still not too late to sign up for the SPF trial newsletter which will follow Beman Fried's sentencing decision.

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