The lawyers filed papers with the 2nd U.S. Circuit Court of Appeals asking a three-judge panel to reverse his conviction and assign the case to a new judge for a retrial, saying the trial judge “imposed a draconian quarter-century sentence on this first-time, non-violent offender” after they contend he hurried the jury into reaching a one-day verdict to cap off a complex four-week trial.

“Sam Bankman-Fried was never presumed innocent. He was presumed guilty — before he was even charged. He was presumed guilty by the media. He was presumed guilty by the FTX debtor estate and its lawyers. He was presumed guilty by federal prosecutors eager for quick headlines. And he was presumed guilty by the judge who presided over his trial,” the lawyers wrote.

They said the passing of time has cast Bankman-Fried in a better light.

“From day one, the prevailing narrative — initially spun by the lawyers who took over FTX, quickly adopted by their contacts at the U.S. Attorney’s Office — was that Bankman-Fried had stolen billions of dollars of customer funds, driven FTX to insolvency, and caused billions in losses,” the attorney said.

“Now, nearly two years later, a very different picture is emerging — one confirming FTX was never insolvent, and in fact had assets worth billions to repay its customers. But the jury at Bankman-Fried’s trial never got to see that picture,” they added.

Bankman-Fried, 32, was convicted last November of fraud and conspiracy a year after his companies collapsed into bankruptcy as investors rushed to withdraw funds. A jury concluded that some of their money had been improperly spent on real estate, investments, celebrity endorsements, political contributions and lavish lifestyles.

At its height, FTX was treated as a pioneer and darling in the emerging cryptocurrency industry, with a Super Bowl advertisement, testimony by Bankman-Fried before Congress and endorsements from celebrities such as quarterback Tom Brady and comedian Larry David.

Bankman-Fried was arrested in December 2022 following his extradition from the Bahamas, just weeks after his company filed for bankruptcy and days after some of his former top executives began cooperating with federal prosecutors. Some of them testified against him at trial.

He initially remained under strict bail conditions at his parents’ home in Palo Alto, California, but Judge Lewis A. Kaplan in Manhattan revoked his bail shortly before the trial after concluding that Bankman-Fried was trying to influence likely witnesses, including an ex-girlfriend who had served as chief executive at Alameda Research, a crypto hedge fund.

The fallen mogul is serving a 25-year sentence after he was sentenced in March in what a prosecutor once described as one of the biggest financial frauds in U.S. history.

A prosecutor’s spokesperson declined to comment Friday.

The post Sam Bankman-Fried’s lawyers claim in an appeal that he was judged too quickly appeared first on The Hemet & San Jacinto Chronicle.

Crypto entrepreneur Sam Bankman-Fried was sentenced Thursday to 25 years in prison for a massive fraud on hundreds of thousands of customers that unraveled with the collapse of FTX, once one of the world’s most popular platforms for exchanging digital currency.

Though he described Bankman-Fried as “extremely smart,” U.S. District Judge Lewis A. Kaplan delivered a blistering analysis of Bankman-Fried and his crimes before announcing a sentence that was half of what prosecutors sought and less than a quarter of the 105 years recommended by the court’s probation officers.

“There is absolutely no doubt that Mr. Bankman-Fried’s name right now is pretty much mud around the world,” Kaplan said of the 32-year-old California man who seemed atop the cryptocurrency universe before his businesses collapsed in November 2022, leaving customers, investors and lenders short over $11 billion, which the judge ordered him to forfeit.

He was convicted in November of fraud and conspiracy — a dramatic fall from a crest of success that included a Super Bowl advertisement, testimony before Congress and celebrity endorsements from stars like quarterback Tom Brady, basketball point guard Stephen Curry and comedian Larry David.

Kaplan imposed the sentence in the same Manhattan courtroom where, four months previously, Bankman-Fried testified that he had intended to revolutionize the emerging cryptocurrency market with his innovative and altruistic ideas, not steal.

The judge said Bankman-Fried repeatedly committed perjury on the witness stand in testimony that was “often evasive, hair-splitting, dodging questions.”

Kaplan said the sentence reflected the risk that Bankman-Fried “will be in position to do something very bad in the future. And it’s not a trivial risk at all.” He added that the sentence was fashioned “for the purpose of disabling him to the extent that can appropriately be done for a significant period of time.”

Kaplan said he would advise the Federal Bureau of Prisons to send Bankman-Fried to a medium-security prison near San Francisco because his notoriety, his association with vast wealth, his autism and his social awkwardness are likely to make him especially vulnerable at a high-security facility.

Assistant U.S. Attorney Nicolas Roos had recommended a prison sentence of 40 to 50 years, saying it was the only way to ensure “the defendant doesn’t do it again.”

Prosecutors said tens of thousands of people and companies worldwide lost billions of dollars since 2017 after Bankman-Fried looted FTX customer accounts that he promised were safe to make millions of dollars of illegal political donations, bribe Chinese officials, make risky investments, buy luxury real estate in the Caribbean and live lavishly.

Kaplan agreed with prosecutors Thursday that Bankman-Fried should not be credited because some investors and customers might recover some money. He noted that customers lost about $8 billion, investors lost $1.7 billion and lenders were shorted by $1.3 billion.

When he spoke, Bankman-Fried stood and apologized in a rambling statement: “A lot of people feel really let down. And they were very let down. And I’m sorry about that. I’m sorry about what happened at every stage.”

He added, “My useful life is probably over. It’s been over for a while now, from before my arrest.”

Wearing his khaki-colored prison uniform and chained at the ankles, Bankman-Fried seemed to briefly get emotional as he spoke for about 20 minutes, expressing regret about “a lot of mistakes” but casting some blame onto others. His trademark messy and bushy hair had returned from the trimmer look he displayed at trial.

He praised some of his former executives and workmates, saying: “They threw themselves into it and then I threw all of that away. It haunts me every day.”

Kaplan later criticized Bankman-Fried’s remarks, saying he expressed “never a word of remorse for the commission of terrible crimes.”

As his misty-eyed client looked on, defense attorney Marc Mukasey said the portrayal of the Massachusetts Institute of Technology graduate as an “arrogant greedy swindler who thought he would get away with fleecing the hard-earned money of hard-working people” was wrong.

“Sam was not a ruthless financial serial killer who set out every morning to hurt people,” Mukasey said in court after urging in court papers that any prison sentence be in the single digits. “Sam Bankman-Fried doesn’t make decisions with malice in his heart. He makes decisions with math in his head.”

The judge later criticized Bankman-Fried’s calculations, saying he was indeed “a math nerd, who looked at decisions in terms of math, expected value.”

He cited trial testimony in which Bankman-Fried’s former girlfriend and fellow executive Caroline Ellison said Bankman-Fried once told her that his willingness to embrace risk was such that he’d be happy to flip a coin if it came up tails and the world was destroyed — as long as if it came up heads, the world would be twice as good.

The judge said Bankman-Fried utilized that risk-taking nature at his companies, “betting on expected value” and weighing the risk of getting caught with the probability of large gains.

“That was the game,” Kaplan said. “It’s his nature.”

Bankman-Fried’s attorneys, friends and family had urged leniency, saying he was unlikely to re-offend. They also said FTX’s investors have largely recovered their funds — a claim disputed by bankruptcy lawyers, FTX and its creditors.

“Mr. Bankman-Fried continues to live a life of delusion,” wrote John Ray, the CEO of FTX who has been cleaning up the bankrupt company. “The ‘business’ he left on November 11, 2022 was neither solvent nor safe.”

One FTX customer, Sunil Kavuri, spoke at sentencing, saying he’d traveled from London on behalf of over 200 victims who had sent impact statements to the judge.

He said he’d spoken to other “victims just like myself who had their dreams destroyed” and had lived “the FTX nightmare every day for almost two years, every day, every night, a lot of crying, sleepless nights.”

Bankman-Fried’s parents, both Stanford Law School professors, did not speak as they left the courthouse Thursday, but later issued a statement: “We are heartbroken and will continue to fight for our son.”

Bankman-Fried, of Palo Alto, California, was once worth billions of dollars on paper as the co-founder and CEO of FTX, which was the second-largest cryptocurrency exchange in the world at one time.

FTX let investors buy dozens of virtual currencies, from Bitcoin to more obscure ones like Shiba Inu Coin. Flush with billions of dollars of investors’ cash, Bankman-Fried took out a Super Bowl advertisement to promote his business and bought the naming rights to an arena in Miami.

But the collapse of cryptocurrency prices in 2022 took its toll on FTX, ultimately leading to its downfall. FTX’s hedge fund affiliate, Alameda Research, had bought billions of dollars of various crypto investments that lost considerable amounts of value in 2022. Bankman-Fried tried to plug the holes in Alameda’s balance sheet with FTX customer funds.

Three people from Bankman-Fried’s inner circle pleaded guilty to related crimes and testified at his trial.

Besides Ellison, two onetime friends of Bankman-Fried — Gary Wang and Nishad Singh — testified they felt they were directed by Bankman-Fried to commit fraud.

The post Fallen crypto mogul Sam Bankman-Fried sentenced to 25 years in prison appeared first on The Hemet & San Jacinto Chronicle.

NEW YORK (AP) — The swift collapse of cryptocurrency exchange FTX sent more shockwaves through the crypto world on Thursday, with authorities now investigating the firm for potential securities violations and analysts bracing for a further downturn in crypto prices.

FTX had agreed earlier this week to sell itself to bigger rival Binance after experiencing the cryptocurrency equivalent of a bank run. Customers fled the exchange after becoming concerned about whether FTX had sufficient capital.

A person familiar with matter said that the Department of Justice and the Securities and Exchange Commission are examining FTX to determine whether any criminal activity or securities offenses were committed. The person could not discuss details of the investigations publicly and spoke to The Associated Press on condition of anonymity.

This week’s developments marked a shocking turn of events for FTX CEO and founder Sam Bankman-Fried, who was hailed as somewhat of a savior earlier this year when he helped shore up a number of cryptocurrency companies that ran into financial trouble.

The investigation into Bankman-Fried and FTX by those in the crypto world as well as securities regulators is centering on the possibility that the firm may have used customers’ deposits to fund bets at Bankman-Fried’s hedge fund, Alameda Research. In traditional markets, brokers are expected to separate client funds from other company assets. Violations can be punished by regulators.

Meanwhile, investors in popular digital currencies got some relief from the latest crypto crisis Thursday after days of selling. Bitcoin rose to $17,691 after dropping as low as $15,512 on Wednesday. Ethereum rose 12%. The gains came after a government report showing inflation cooled a bit last month gave a lift to riskier assets.

The crypto world had hoped that Binance, the world’s largest crypto exchange, might be able to rescue FTX and its depositors. However, after Binance had a chance to look at the books of FTX, it became clear that the smaller exchange’s problems were too big to solve.

A person familiar with the dealings between FTX and Binance described the books as a “black hole” where it was impossible to differentiate between the assets and liabilities of FTX the exchange and those of Alameda Research. This person spoke on condition of anonymity because they weren’t authorized to speak publicly about the matter.

This person said Bankman-Fried committed the “ultimate sin” by tapping into FTX’s custodial assets to fund Alameda Research.

In a further illustration of FTX’s financial straits, Bankman-Fried asked his investors Wednesday for $8 billion to cover withdrawal requests, according to The Wall Street Journal, citing unnamed sources.

In a series of Tweets on Thursday, the FTX founder and CEO said that he did not have enough liquidity to cover withdrawals and that he was more leveraged than he had thought.

“I f(asterisk)(asterisk)(asterisk)ed up, and should have done better,” he said.

The latest crisis in the crypto industry prompted renewed calls for stricter regulation. White House press secretary Karine Jean-Pierre said the FTX developments “highlights why prudent regulation of cryptocurrencies is indeed needed. The White House, along with the relevant agencies, will again closely monitor the situation as it develops.”

The collapse of the cryptocurrency’s third largest exchange is likely to cause further disruption across the entire crypto world, analysts say, meaning Thursday’s rally could be temporary.

“The unwinding of FTX, as well as its shock of confidence to the system, will cause crypto prices to fall even further leading to “a new cascade of margin calls,” said analysts at J.P. Morgan in a note to investors. This would be similar to the selloff that happened after the collapse of the stable coin Terra earlier this year, where prices continued to decline weeks after its failure.

“This deleveraging is likely to last for at least a few weeks unless a rescue for Alameda Research and FTX is agreed quickly,” J.P. Morgan analysts wrote.

The crypto industry is waiting to see what other companies are impacted by the FTX collapse. The venture capital fund Sequoia Capital said Thursday it is writing down its total investment of nearly $215 million n FTX.

Find your latest news here at the Hemet & San Jacinto Chronicle

The post AP source: US authorities investigate crypto exchange FTX appeared first on The Hemet & San Jacinto Chronicle.