By Luc Cohen
NEW YORK (Reuters) -Sam Bankman-Fried is delusional in claiming the possibility customers of now-bankrupt FTX cryptocurrency exchange may recover funds means he did not steal, his successor as CEO said on Wednesday.
Bankman-Fried was convicted in November of stealing $8 billion from FTX customers.
In a so-called victim impact statement filed in Manhattan federal court, Bankman-Fried’s successor, John Ray, said FTX customers will recoup some losses because of the bankruptcy estate’s efforts, not because Bankman-Fried did not steal.
“Mr. Bankman-Fried continues to live a life of delusion,” Ray wrote. “There should be no delusion that because assets have increased in value or that the professionals have been able to recover funds and assets taken or stolen from the estate, that there was no need for the Chapter 11 cases.”
U.S. District Judge Lewis Kaplan is scheduled to sentence Bankman-Fried on March 28 in Manhattan federal court.
Prosecutors are seeking a 40- to 50-year prison term. Defense lawyers believe a sentence should reflect a “significant” reduction below the minimum 5-1/4 years they say is called for under federal guidelines.
The 32-year-old former billionaire pleaded not guilty to seven fraud and conspiracy counts, and has vowed to appeal his conviction.
He acknowledged at trial having made mistakes running FTX, but said he never intended to steal funds.
Defense lawyer Marc Mukasey has said FTX customers would likely be made whole in the bankruptcy process, and that Bankman-Fried worked diligently after the exchange’s November 2022 collapse to recover funds. He was arrested the next month.
“The memorandum distorts reality to support its precious ‘loss’ narrative and casts Sam as a depraved super-villain,” Mukasey wrote on Monday night, referring to prosecutors’ sentencing proposal.
Prosecutors had argued that Bankman-Fried gambled with customers money out of greed, and wouldn’t admit what he did was wrong.
How much customers will recover remains an open issue.
In court filings this week, several said they would be dissatisfied being paid based on what their cryptocurrency holdings were worth when FTX imploded, because those assets would be worth more now.
“Any delays and missed market swings should be attributed to operation of the bankruptcy code and not to Sam’s alleged crimes,” Mukasey wrote in a separate filing on Wednesday.
Ray, who helped manage Enron after the energy trader’s 2001 bankruptcy, said Bankman-Fried’s theft meant many accounts had fewer assets than customers wanted to believe.
He also said FTX equity investors, whom Bankman-Fried was also convicted of conspiring to defraud, were unlikely to recover significant sums in the bankruptcy.
(Reporting by Luc Cohen in New YorkEditing by Nick Zieminski and Bill Berkrot)
Source: finance.yahoo.com