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The criminal charges against Sam Bankman-Fried carry big penalties and jail time if proven, legal experts say

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Sam Bankman-FriedSam Bankman-Fried was arrested Monday in the Bahamas.

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  • A federal indictment against Sam Bankman-Fried leveled multiple charges of fraud and conspiracy.
  • Prosecutors’ next task is extraditing him from the Bahamas to appear at a federal court in New York.
  • If he pleads guilty or ends up being convicted, a federal judge will ultimately decide the length of any prison sentence. 

US prosecutors closed in on Sam Bankman-Fried with astonishing speed, bringing criminal charges against the former FTX chief executive just about a month after the exchange shocked the crypto world by filing for bankruptcy. 

And those charges come with potentially big penalties, if he’s found guilty: In a sparse indictment unsealed on Tuesday morning, federal prosecutors in Manhattan listed eight criminal counts. Among the charges he’s faced with are four counts relating to wire fraud: One count alone carries a statutory maximum of up to 20 years in prison, according to federal guidelines. 

In a separate civil complaint on Tuesday, the US Securities and Exchange commission detailed what it called a “brazen, multi-year scheme” at FTX. The agency alleged that Bankman-Fried bilked investors of at least $1.8 billion and risked “billions of dollars” in customer funds.  

Mark S. Cohen, an attorney for Bankman-Fried and a partner at the law firm Cohen & Gresser LLP, told Insider in an emailed statement that his client “is reviewing the charges with his legal team and considering all of his legal options.”

Prosecutors leveled multiple conspiracy and wire fraud charges, some of which can be fairly straightforward as they don’t require elaborate exposition to support, according to legal experts. 

“Charges like wire fraud are prosecutors’ best friends because they’re clean and easy to use, and easy to explain to a jury,” said Paul Coggins, a former US Attorney in Dallas who now co-leads the white collar group at the law firm Locke Lord LLP.

The next steps for prosecutors are already likely in motion since Bankman-Fried’s arrest in the Bahamas on Monday. US prosecutors will have to extradite him so that he can appear before a federal court in New York for an initial appearance, where he would formally be read his charges and enter a plea. If the extradition goes without delay, that initial hearing could happen soon after he arrives in the US. 

At that time, a judge would also determine whether Bankman-Fried could be considered a flight-risk and need to be held in custody until a trial or sentence, or whether to release him temporarily after imposing a bond. 

And if Bankman-Fried pleads guilty or ends up being convicted in a trial, a federal judge in New York will ultimately decide on the length of any prison sentence. 

That sentence is often a product of guidelines that a pre-sentence investigation department, which works for the court, will assess. Defendants and prosecutors can both raise any objections to that assessment, with the judge ruling on any disagreements. 

It is too soon to tell what, if any, charges Bankman-Fried would be convicted on. But federal criminal statutes prescribe these maximum prison penalties for the following counts:

  • Four counts relating to wire fraud: Maximum sentence for each count is 20 years in prison. 
  • One count relating to money laundering: Maximum sentence is 20 years in prison.
  • Three remaining conspiracy counts: Maximum sentence for each count is 5 years in prison.

Those maximums don’t necessarily indicate the final outcome. Judges considering sentences look at a range of factors including the scope of losses to customers and investors, and what the defendant has admitted to, attorneys said. 

“If the defendant were to work out a plea agreement, they could get points off for acceptance of responsibility,” Coggins said, referring to a potential reduction in sentence.

The DOJ’s unsealed indictment followed parallel civil complaints Tuesday morning by the Commodity Futures Trading Commission and the SEC.

US prosecutors could also follow up with a more detailed superseding indictment and potentially charge other defendants connected with the alleged conspiracy at FTX.

Read the original article on Business Insider
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