This week, there were many headlines about Sam Bankman-Fried’s upcoming criminal sentencing, as we learned prosecutors have asked the judge to sentence the former cryptocurrency exchange CEO to 100 years in federal prison. Lawyers representing Bankman-Fried responded they disagreed with the recommendation, as they filed a recommendation for a sentence between 5 and 6.5 years.
It’s no surprise there’s a disagreement about the length of time Bankman-Fried should serve in prison for fraud, conspiracy, and money laundering.
What is a surprise, says federal prison consultant Sam Mangel, are some of the finer points in the 98-page sentencing memorandum released this week: “The memorandum is filled with signs Mr. Bankman-Fried and his loved ones have not truly accepted responsibility, which is fundamental to any form of rehabilitation and moving forward.”
As is the case with most facing sentencing for white collar crime, the argument for leniency highlights Bankman-Fried’s (generally clean) personal history, philanthropic endeavors, and lack of prior criminal conduct. The memo paints a picture of a man whose actions, while profoundly mistaken, were not driven by greed but rather a misguided approach to ambitious goals. This is a standard argument that is par for the course when it comes to sentencing for white-collar crime.
The Problem with Sam Bankman-Fried’s Approach
The memorandum starts to become problematic when the defense points to Bankman-Fried’s potential for positive societal contributions. His lawyers present the argument that a lengthy imprisonment would be a disservice not just to Bankman-Fried but to the world, as society could benefit from his talents and his desire to rectify his wrongs.
The argument is complicated by the fact that Bankman-Fried’s lawyers argue that “the harm to customers, lenders, and investors is zero.”
It’s tough to present your client as a man ready to rectify his wrongs when you later say the harm is non-existent.
And though this may just be lawyers lawyer-ing and attempting to do what’s best for their client, avoiding prison time may not be what’s actually best for Bankman-Fried. As Sam Mangel shares on his YouTube channel, the time removed from society can be transformative: “Meaningful change often comes from enduring the full brunt of the consequences of one’s actions. This process allows for an introspective journey that can transform regret into a powerful force for good.”
The notion that one can learn from their mistakes without fully facing the consequences undermines the justice system’s role in ensuring that remorse is not just felt but is also deeply internalized through the experience of loss and reflection that comes with a prison sentence. It’s about sitting with the shame and the gravity of one’s actions in a manner that mere reflection from a position of comfort cannot replicate.
The Big Picture
The truth is that even if Bankman-Fried were fully respectful of the process (which he wasn’t) and fully accepted what he’s done wrong (which he appears to be struggling with, per the memorandum), there are broader implications. His sentence must serve as a deterrent to others.
Bankman-Fried’s blatant carelessness with investor funds – regardless of the total damage number – is not something we, as a society, can accept and wave off as “no big deal.”
This is not just about punishing wrongdoing but about safeguarding the crypto ecosystem and ensuring that innovation does not become a cloak for illegal activities.
Cryptocurrency has long grappled with significant challenges regarding fraud and questions of legitimacy, and the industry is at a pivotal stage where establishing trust and credibility is more important than ever before: the stakes are higher than they’ve ever been.
The prosecution and sentencing of figures like Bankman-Fried, therefore, play a crucial role in preventing corrupt practices in the future. A firm legal stance against such high-profile fraud cases can be a cornerstone in the faith in digital currencies. The right sentence will demonstrate a commitment to regulatory oversight and legal accountability, which is essential for attracting more mainstream adoption and investment. Ultimately, addressing these issues head-on, with transparency and rigor, could be instrumental in cryptocurrency becoming a (truly) trusted component of the global financial system.
So, what does the right sentence look like? I’m certainly not the one to answer that, and I do not envy the position Judge Kaplan finds himself in. There’s no doubt there are factors in the case of Sam Bankman-Fried that take a serious matter – like sentencing someone to federal prison – and make it even more so.
But what we do know is no matter how much Bankman-Fried, his family, and lawyers wish to minimize the damage, SBF is going to serve time in federal prison. The sooner he accepts this fact, the sooner the real rehabilitation begins.
I’m rooting for him.
This article was originally published by Drew Chapin on HackerNoon.
