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It has now been more than a month since the CoinDesk report that unraveled Sam Bankman-Fried's FTX, what could be one of the largest and most egregious criminal frauds in human history. But we're still getting a steady stream of horrifying revelations, like desiccated victims being excavated from a serial killer's basement on live TV. On the brighter side, we also have some fresh insight into the severe consequences Bankman-Fried and his co-conspirators are likely to face.
There has been huge anxiety, particularly among crypto types, about when and whether Bankman-Fried will be brought to justice. Despite clear signs of fraud, he does not seem to have been detained by law enforcement. He remains in the Bahamas, giving interviews intended to obfuscate his actions and distract from the continuing drumbeat of grisly financial discoveries. Coinbase CEO Brian Armstrong is not alone in regarding this as "baffling."
The most paranoid observers (and the seemingly delusional Bankman-Fried himself) might suspect this to be light treatment, the fruit of his years of currying favor with U.S. leaders. But it's more likely the delay is just part of the slow-grinding legal process, according to an in-depth new legal report from the excellent MacKenzie Sigalos at CNBC. The U.S. Department of Justice has requested an independent probe of the case, and former Federal prosecutor Renato Mariotti told CNBC that "it sure looks like there's a chargeable fraud case here."
And Bankman-Fried's punishment is no small potatoes: he could get life in prison, former CFTC trial lawyer Braden Perry told CNBC. That's according to U.S. sentencing guidelines, and taking into account the number of victims and the size of the apparent fraud at FTX and its closely related trading shop Alameda Research. The CNBC report goes into gratifying detail about exactly what books are likely to be thrown at Bankman-Fried, and how hard.
The bad news is that those sentencing guidelines are often "bent" to give softer penalties to white-collar criminals. That's based on the implicit belief, still widespread in the U.S. court system, that things like financial fraud and embezzlement aren't "real" crime. Bankman-Fried's youth, combined with his ongoing scheme to paint himself as an incompetent buffoon, could also elicit undeserved mercy from a court. It will take real and sustained public and political pressure to make sure that Bankman-Fried gets what's coming to him.
– David Z. Morris
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