Tuesday, February 27, 2024


After a monthlong trial and about four hours of deliberation, a jury convicted the FTX founder Sam Bankman-Fried of seven counts of fraud and conspiracy last week. He had been accused of stealing billions of dollars from his cryptocurrency exchange’s customers and investors, funneling the money into his investments and extravagant spending.

Now, Judge Lewis Kaplan of the Southern District of New York will decide how many years in prison, if any, those crimes warrant. The looming sentencing raises age-old questions about the appropriate punishment for economic crimes.

The maximum term is more than 100 years for Bankman-Fried, who will turn 32 in March, the month when he’ll be sentenced. But federal sentencing guidelines, meant to ensure consistency across courts around the country, also allow for flexibility. Sentences for the same crimes can vary greatly, depending on factors like the severity of the offense, the convicted person’s cooperation and the judge’s inclinations.

White-collar crimes tend to be punished less severely than violent crimes, because offenders aren’t a physical threat to society. In 1990, Michael Milken, known as the “junk bond king,” pleaded guilty to six felony counts of fraud and conspiracy and was sentenced to 10 years in prison. He was released in about two years after cooperating with the government, and President Donald Trump pardoned him in 2020. Bernie Madoff, who pleaded guilty to 11 criminal counts for a 30-year $64 billion fraud, was sentenced to 150 years in prison in 2009. He died in custody in 2021. Elizabeth Holmes, the founder of Theranos, went to trial and was sentenced last November to about 11 years in prison after being found guilty of four counts of defrauding investors. Her recommended sentencing range was 11 to 14 years, with a maximum of 20.

What is fair? That depends in part on how a judge views the purpose of punishment. There are three classic theories:

  • Deterrence: Severe sentences send a message to would-be criminals and prevent crimes. “If you’re going to deter, you have to reach an audience,” John Coffee, a Columbia University law professor and an expert on white-collar crime, told DealBook. Bankman-Fried’s is a “rare case” that gets lots of media coverage, he said, so millions will hear of his punishment, serving deterrence goals
  • Retributive justice: Wrongdoing must always be punished. Proponents argue for harsh sentences that exact what they consider commensurate vengeance.
  • Rehabilitation: The goal is to restore offenders so they can re-enter the community. That means less severe sentences generally and, for economic crimes, perhaps higher fines and restitution to victims, all premised on the notion that people can be redeemed if given the opportunity.


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