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FTX founder Sam Bankman-Fried was sentenced this week to 25 years in prison for his role in an $10 billion cryptocurrency fraud, dodging the 40- to 50-year sentence requested by the government and the 110-year sentence recommended under the sentencing guidelines.

The 32-year-old former billionaire — who was convicted in November of defrauding customers and investors through his failed cryptocurrency exchange FTX — had requested a sentence of only five to six years. But U.S. District Judge Lewis A. Kaplan was not persuaded by his arguments, imposing a lengthier sentence on Bankman-Fried than those imposed on other notorious white-collar defendants, such as Elizabeth Holmes — the founder of the former Silicon Valley darling Theranos — and Jeffrey Skilling — the former chief executive of Enron.

Below is an exploration of the factors that contributed to Judge Kaplan’s ruling and how Bankman-Fried’s sentence compares to those of other notorious fraudsters:

Loss Amount

The driving force behind Bankman-Fried’s sentencing exposure was the massive loss amount at the center of his fraud, which ballooned his base offense level by 30 points.

The government argued that a conservative estimate of intended loss was at least $10 billion, with a more realistic estimate being $14 billion. According to the government, Bankman-Fried “orchestrat[ed] one of the largest financial frauds in history.”

“The amount of loss — at least $10 billion — makes this one of the largest financial frauds of all time. Indeed, there does not appear to have been such a fraud of this magnitude — measured by loss — prosecuted in this country, let alone in this District, since the prosecution of Bernie Madoff,” the government said.

Bankman-Fried took a different position, arguing that “[t]he harm to customers, lenders, and investors is zero.” All FTX customers and creditors would eventually be paid back in full through FTX’s bankruptcy, he said.

Judge Kaplan summarily rejected this argument at the sentencing hearing.

“A thief who takes his loot to Las Vegas and successfully bets the stolen money is not entitled to a discount on the sentence by using his Las Vegas winnings to pay back all or part of what he stole,” Judge Kaplan said, according to Law360.

Obstruction of Justice

The government also moved for a two-level enhancement because Bankman-Fried committed perjury during his month-long trial. Among other instances, Bankman-Fried’s “most egregious” perjurious testimony was that he did not know his trading firm had spent billions of dollars of FTX customer deposits, despite Bankman-Fried personally approving these expenditures, the government argued.

Bankman-Fried argued that the government failed to identify a specific line of alleged perjurious testimony, and that he should not be punished for exercising his Fifth Amendment right against self-incrimination.

Judge Kaplan sided with the government and imposed the sentencing enhancement for perjury.

“When he wasn’t outright lying, he was often evasive, hairsplitting, dodging questions and trying to get the prosecutor to reword questions,” Judge Kaplan said, according to Law360. “I’ve been doing this job for close to 30 years, I’ve never seen a performance quite like that.”

Comparative Cases

Both the government and Bankman-Fried focused on high-profile white-collar defendants in their sentencing memorandums.

Bankman-Fried argued that he should receive a lesser sentence than Elizabeth Holmes — who is currently serving 11 years for deceiving the investors of her startup blood-testing company Theranos — because she put the health and safety of patients at risk, while he did not physically harm any of his victims. The government retorted that he should receive a higher sentence because the loss amount in Holmes’s case was less than $150 million, while Bankman-Fried stole billions from his customers.

Both sides also focused on Bernie Madoff, who was sentenced to 150 years in prison for orchestrating what many call the largest Ponzi scheme in history. Bankman-Fried argued that he should receive a lesser sentence because: (1) he began FTX with lawful intentions, while Madoff’s business was a fraud from the beginning; (2) the loss amount is lower than Madoff’s case; (3) Madoff preyed on investors who believed they were investing in conversative funds, while cryptocurrency traders have a higher risk tolerance; and (4) Madoff was 71 years old at the time of his sentencing, while Bankman-Fried is young with much of his life ahead of him. The government rejected each of these arguments.

“Like Madoff, the defendant misappropriated billions of dollars of customer money over a multi-year period, spending much of it on his own ventures, and causing massive harm to his victims,” the government said. “And unlike Madoff, Bankman-Fried has not accepted responsibility; rather, he obstructed justice, he perjured himself, and he committed other significant crimes.”

Bankman-Fried argued that his case most aligned with that of Michael Milken, the billionaire financier who was sentenced to 10 years for securities fraud. Both men were young, had a “meteoric rise” in their industry, were “geniuses,” and had an interest in charity, he argued. The government retorted that Milken did not steal over $10 billion dollars, obstruct justice, or perjure himself.

Conclusion

Bankman-Fried’s sentencing is a watershed moment in the enforcement space. It marks one of the most significant financial frauds in history, and it sends a strong message that the government will not back down from prosecuting complex cases focused on new technologies.