SBF is convicted, can the former close friends who testified can escape legal punishment?
Original author - BloombergBob Van Voris
Compile - Odaily 0xAyA
The jury announced the verdict against FTX co-founder Sam Bankman-Fried, but it was the testimony of three of his former friends that really convicted him. Now, the question hangs over their heads just how grateful prosecutors are for their help.
Alameda ResearchCEO Caroline Ellison, FTX co-founder Gary Wang and FTX head of engineering Nishad Singh were the star witnesses in the SBF trial. All three said Bankman-Fried directed them to commit fraud by helping to transfer billions of dollars in FTX client funds to Alameda, an affiliated hedge fund in which Bankman-Fried owned 90% of the shares.
Their testimony was bolstered by the fact that they had admitted their crimes as part of a cooperation agreement with prosecutors.
Its nothing new that cooperating witnesses often receive leniency, especially if they help the government catch a bigger fish. SBF is a former superstar in the crypto industry, and his conviction definitely meets that standard.
For example, gang leader Sammy “the Bull” Gravano was only sentenced to 5 years in prison, even though he confessed to 19 murders. The light sentence he received was because he testified against the more notorious John Gotti, who was sentenced to life. imprisonment. Another example is Enrons massive fraud case, when its chief financial officer Andrew Fastow was sentenced to just six years in prison for testifying against CEO Jeffrey Skilling. The sentences they received were generally below the standard for their actual crimes.
Several criminal defense attorneys following the case said the testimony of Ellison, Wang and Singh could lead to them not being sentenced or receiving lighter sentences. By comparison, SBF could face decades when he is sentenced in March. of imprisonment.
The three are likely to be sentenced after him, with prosecutors expected to submit a letter to the judge outlining the value of their cooperation. Judges are not bound by such letters, but they often agree, in part to encourage witnesses in other cases to testify aggressively.
Wang said during the trial that he hoped it would be best not to go to jail when asked by prosecutors.
Justin Paperny, a former UBS Group AG broker who served 18 months for fraud, said that if they do get jailed, it will likely be relatively short and most likely in a minimum-security camp for nonviolent offenders. Serve sentence.
But even if they avoid jail time, Ellison, Wang and Singh will likely face other forms of punishment. The government may force them to return the proceeds of the fraud and pay compensation to the victims. That could be a heavy burden, given that the government says FTX customers have lost billions of dollars. Fastow was ordered to hand over $20 million for his role in Enrons $60 billion bankruptcy.
In the United States, you have to make financial compensation that is consistent with the facts. At this point, youre not going to get a break, said Tim Howard, a former federal prosecutor in Manhattan.
Paperny now works as a counselor working with white-collar defendants facing prison time. After his release, he said, he answered calls at minimum wage to help pay for a $535,000 restitution order. The Department of Justice can pursue the payment for 20 years.
"Supervision is very active in collecting payments;"Paperny said."You cant sell or refinance your home because the proceeds go to the government". He said he finally paid off the compensation in 2019.
Singh has agreed to surrender many assets he acquired while working at FTX or Alameda, including a $3.7 million home he purchased in Washington states scenic San Juan Islands. He also agreed to hand over a stake in artificial intelligence startup Anthropic PBC he bought for $40 million, an investment that has only increased in value since FTX collapsed.
Because Ellison, Wang and Singh are all still relatively young, they will further face the challenge of carving out new careers, as their involvement in the FTX collapse could stigmatize them in the minds of future employers.
All three attended prestigious universities—Ellison graduated from Stanford University, and Wang was SBF’s roommate at MIT. However, cryptocurrency, finance, and other fields that may hold other people’s funds may be forbidden areas for them in the future.
The risk is just too high for investors, said Chris Rice, a partner at Riviera Partners, a technology executive recruiting firm. I dont think theyre going to get the same exposure they used to.
