INSTANT REACTION: Bankman-Fried Sentenced to 25 Years

Bloomberg Audio Studios, podcasts, radio news. 0:00:07.800 --> 0:00:10.520 Sam Bankman freed sentencing is coming out. He has sent 0:00:10.640 --> 0:00:14.120 us to twenty five years in prison after being convicted 0:00:14.160 --> 0:00:17.640 of fraud over the ft X collapse. Again, he's been 0:00:17.680 --> 0:00:20.880 send us to twenty five years in prison after being 0:00:20.920 --> 0:00:24.560 convicted of fraud over the ft X collapse. Not the 0:00:24.560 --> 0:00:27.680 Bernie made off Nope situation, but then not the ten 0:00:27.720 --> 0:00:30.120 eleven years of sort of the lower white collar crime. 0:00:30.200 --> 0:00:33.080 Yeah, they're the defense was asking for, you know, six 0:00:33.080 --> 0:00:35.760 and a half to seven years. And again the defense 0:00:35.960 --> 0:00:37.839 the prosecution was looking for something in a forty to 0:00:37.840 --> 0:00:40.160 fifty percent range and maybe splitting the difference. Hey, Barry, 0:00:40.280 --> 0:00:42.199 just let you know, we got about a minute left here. 0:00:42.320 --> 0:00:44.919 Just put into context if he can, in the context 0:00:44.920 --> 0:00:47.080 of Bankman freed his sentencing here for twenty five years. 0:00:47.280 --> 0:00:48.080 Yeah, what's your reaction? 0:00:48.159 --> 0:00:48.800 What's your reaction? 0:00:49.000 --> 0:00:52.760 So, you know, I'm more in the Michael Lewis camp 0:00:52.880 --> 0:00:57.760 than than in I love Zeke Fox's book, but the 0:00:57.840 --> 0:01:00.440 you know, when you look at everybody having recovered all 0:01:00.480 --> 0:01:04.920 of their assets, the story perfect example of narrative fallacy. 0:01:04.959 --> 0:01:07.720 The story of this guy is a genius who has 0:01:08.240 --> 0:01:12.000 figured out how to make crypto modernized, and then oh, 0:01:12.040 --> 0:01:15.000 it turns out that they're foamingling funds. Yep, and they're 0:01:15.080 --> 0:01:19.080 kind of running everything on the fly. It's amazing how 0:01:19.160 --> 0:01:23.520 one narrative story failed and was replaced by another. This 0:01:23.600 --> 0:01:27.040 is very similar to Fairhose and what happens there. We 0:01:27.120 --> 0:01:29.600 love these stories and they often deceive us. 0:01:29.680 --> 0:01:31.600 Yep. Absolutely, Hey, Parry, thank you so much for joining us. 0:01:31.600 --> 0:01:34.200 Barry Rodholts, host of Master's in Business on Bloomberg Radio 0:01:34.200 --> 0:01:36.680 and the founder of Rodholts Wealth Management. Again the key 0:01:36.800 --> 0:01:41.440 data point here, as Alex just mentioned, Sam Banking Freed 0:01:41.520 --> 0:01:44.760 sentenced to twenty five years in prison, ordered to four 0:01:44.800 --> 0:01:49.480 foot more than eleven billion dollars. Let's bring in June Grosso, 0:01:49.800 --> 0:01:52.360 Bloomberg's legal analy She joins us here on Bloomberg Interactive 0:01:52.360 --> 0:01:54.600 Broker Studio. Initial reactions juram Well. 0:01:54.480 --> 0:01:56.960 I think it's a very tough sentence, but it was 0:01:57.040 --> 0:02:01.440 expected to Judge Kaplan before the trial said that he 0:02:01.560 --> 0:02:05.320 increased the sentence in guideline range because he found that 0:02:05.400 --> 0:02:09.360 Sam Bankminfried had perjured himself at his trial. He found 0:02:09.400 --> 0:02:12.560 that he committed witness tampering. If you remember, he put 0:02:12.639 --> 0:02:16.280 him into prison before trial, despite this huge bail package, 0:02:16.560 --> 0:02:18.840 because he felt that he was campering with a witness, 0:02:19.200 --> 0:02:21.640 and he said there was a loss to investors of 0:02:21.720 --> 0:02:24.720 one point seven billion dollars, despite the fact that people 0:02:24.720 --> 0:02:26.600 have said that the investors are going to get paid 0:02:26.639 --> 0:02:29.600 back most of them. He said something that I thought 0:02:29.639 --> 0:02:33.920 was kind of it was chilling. So the defense was saying, look, 0:02:34.040 --> 0:02:36.639 let him out early. He could be like a Michael Milket. 0:02:36.720 --> 0:02:39.079 He can come back because he wants to do good 0:02:39.120 --> 0:02:41.720 in the world. He has this ability. And the judge 0:02:41.760 --> 0:02:44.880 said that there's a risk that this man will be 0:02:44.919 --> 0:02:47.920 in a position to do something very bad in the future, 0:02:47.960 --> 0:02:51.080 and it's not a trivial risk. Part of my sentence 0:02:51.080 --> 0:02:53.240 will be for the purpose of disabling him to the 0:02:53.280 --> 0:02:55.640 extent that it can be appropriately done to him for 0:02:55.680 --> 0:02:58.919 a significant period of time. So the judge just didn't 0:02:59.040 --> 0:03:02.079 buy his good in tensions, he said his intentions were 0:03:02.120 --> 0:03:02.840 to gain power. 0:03:03.240 --> 0:03:05.160 But on the flip side, I mean, he wasn't sentenced 0:03:05.160 --> 0:03:07.040 one hundred and fifty years, so like he will still 0:03:07.080 --> 0:03:09.440 have a life when he gets out right. Just if 0:03:09.440 --> 0:03:11.320 you're just joining us now, Sam bankmund free to send 0:03:11.400 --> 0:03:14.040 us twenty five years in prison he will also be 0:03:14.320 --> 0:03:18.240 ordered to forfeit more than eleven billion dollars. So presumably, 0:03:18.280 --> 0:03:20.200 like do you serve that whole twenty five years? 0:03:20.240 --> 0:03:22.200 You serve eighty five percent of the time, and no 0:03:22.240 --> 0:03:26.560 one know the request from the Bureau of Probation for 0:03:26.600 --> 0:03:29.520 one hundred years was ludicrous. No one would be sentenced 0:03:29.520 --> 0:03:32.080 to that. I mean, think about Bernie Madoff. That's like 0:03:32.120 --> 0:03:35.960 a worst scam that you can think of. So he 0:03:36.160 --> 0:03:37.960 was like, he's like the high end of the scale. 0:03:38.040 --> 0:03:41.240 The government was asking for forty to fifty years. That's 0:03:41.360 --> 0:03:44.160 also very high. I mean, you know, think about what 0:03:44.360 --> 0:03:46.880 happened here. But I think the judge is also trying 0:03:46.880 --> 0:03:49.520 to send a message to you know, this has been 0:03:49.560 --> 0:03:53.040 called the greatest financial fraud in the US history by 0:03:53.320 --> 0:03:55.600 the US Attorney for the Southern District of New York. 0:03:55.640 --> 0:03:57.360 So the judge is trying to send a message. But 0:03:57.440 --> 0:04:00.720 this judge has been so tough through the entire trial. 0:04:01.040 --> 0:04:04.360 If you remember, before bankmin Free testified, he had him 0:04:04.400 --> 0:04:07.240 on the stand for three hours outside the presence of 0:04:07.280 --> 0:04:11.240 the jury. He denied almost all of the requests that 0:04:11.280 --> 0:04:16.279 the defense made for motions to introduce different defenses that 0:04:16.360 --> 0:04:20.360 he wanted to present to the jury different expert witnesses. 0:04:20.680 --> 0:04:23.640 So he's been tough on him since the very beginning. 0:04:23.680 --> 0:04:26.160 But I you know, I thought he should get ten years, 0:04:26.200 --> 0:04:28.680 so maybe he'll get twenty years. In point of fact, 0:04:28.720 --> 0:04:29.920 he got twenty five years. 0:04:30.000 --> 0:04:32.800 Interesting, do we know what type of facility he will 0:04:32.839 --> 0:04:36.560 serve this time in? Is this a you know, minimum maximum? 0:04:36.800 --> 0:04:37.359 What did they say? 0:04:37.480 --> 0:04:39.880 I mean, really he's a white collar criminal. There's all 0:04:39.960 --> 0:04:42.480 kinds of evidence that in when he's been in prison, 0:04:42.520 --> 0:04:45.440 and he's been in rikers, that he's been helping to 0:04:45.720 --> 0:04:50.360 teach some of the inmates to help with their gged diplomas, 0:04:50.760 --> 0:04:53.960 and that his one of his roommates show he said 0:04:54.120 --> 0:04:58.640 his salemates is a former police officer, and he said that, 0:04:58.680 --> 0:05:02.200 you know, he really is getting along well in prison 0:05:02.279 --> 0:05:04.880 and he's trying to make you do the best he can. 0:05:05.400 --> 0:05:07.680 I don't this will be up to the Bureau of Prisons. 0:05:07.720 --> 0:05:09.400 It's not gonna be up to the judge where he goes. 0:05:09.400 --> 0:05:12.320 So they're going to do a report after this and determine. 0:05:12.360 --> 0:05:14.880 And also I think he might go to a facility 0:05:14.880 --> 0:05:17.360 in California so he could be near his family. 0:05:18.400 --> 0:05:20.560 And just to reiterate if you're just joining us FTX 0:05:20.600 --> 0:05:22.920 CO finder Sam Beckmanfried has now been sentenced so twenty 0:05:22.960 --> 0:05:25.960 five years in prison for stealing billions of dollars from customers, 0:05:26.240 --> 0:05:28.839 marking the final chapter in this case that has just 0:05:28.880 --> 0:05:32.240 captivated pretty much everybody. He also has been ordered to 0:05:32.279 --> 0:05:36.440 forfeit eleven billion dollars. What happens now? Is there any 0:05:36.720 --> 0:05:40.200 other thing? Appeal convo? What happens next? 0:05:40.600 --> 0:05:43.320 There is an appeal? I mean the defense is going 0:05:43.320 --> 0:05:46.200 to appeal this. Appeals are very hard in criminal cases 0:05:46.200 --> 0:05:48.280 and a lot of the decisions that the judge made 0:05:48.880 --> 0:05:52.960 are considered within a trial judge's discretion, so it's a 0:05:53.000 --> 0:05:55.400 difficult appeal. But yes, they were an appeal. He's hired 0:05:55.440 --> 0:05:58.280 new lawyers. He changed his lawyers from the trial, so 0:05:58.400 --> 0:06:00.920 he has representing him now more Ark muc Casey, who's 0:06:00.960 --> 0:06:04.679 a very well known criminal defense attorney. He represented Trevor 0:06:04.720 --> 0:06:08.279 Milton and got him a sentence of four years when 0:06:08.320 --> 0:06:11.560 the prosecution wanted eleven years, so he. 0:06:11.520 --> 0:06:13.960 Didn't So would he be appealing the verdict or just 0:06:14.000 --> 0:06:14.480 the sentence? 0:06:14.520 --> 0:06:16.920 The verdict? He will be appealing the verdict. What happened 0:06:16.920 --> 0:06:20.479 at trial? You know the charges, the different for example, 0:06:20.480 --> 0:06:22.960 what I just said, the judge didn't allow him all 0:06:22.960 --> 0:06:26.599 these different expert witnesses that he wanted to testify to 0:06:26.960 --> 0:06:30.680 present defenses, and the judge cut all that off. So 0:06:31.040 --> 0:06:33.400 that will be I think the basis of the appeal 0:06:33.560 --> 0:06:38.320 and you know, whatever the defense can can drag up. 0:06:38.480 --> 0:06:41.320 I've also seen things like people are getting their money back, 0:06:41.400 --> 0:06:45.040 the recovery rate is going to be Okay, he has autism, 0:06:45.320 --> 0:06:49.600 he can't like that should be reduced, like does that 0:06:49.640 --> 0:06:50.760 hold water? Like what is that? 0:06:50.920 --> 0:06:54.200 Well, that's what the defense argued. The judge said, he 0:06:54.640 --> 0:06:58.039 is a hot, very high achieving, autistic person, which means 0:06:58.080 --> 0:07:01.400 he's capable of huge accomplishments. But then he turned that 0:07:01.480 --> 0:07:03.760 around and said, wait, we have to be careful of 0:07:03.760 --> 0:07:06.719 those accomplishments. He's a dangerous person. So that was almost 0:07:06.880 --> 0:07:09.480 used against him by the judge. But yeah, there was 0:07:09.600 --> 0:07:12.480 there were There was letters to the judge about his 0:07:12.560 --> 0:07:16.240 autism and how that makes him socially awkward. They had 0:07:16.360 --> 0:07:19.360 experts testifying about it, but the judge didn't buy it. 0:07:19.400 --> 0:07:22.440 The defense also brought up the fact that most of 0:07:22.440 --> 0:07:24.720 the investors, it looks like, are going to be made whole. 0:07:25.000 --> 0:07:26.640 The judge didn't buy that either. 0:07:27.000 --> 0:07:31.680 Despite the judge said that, he said that he's really 0:07:31.800 --> 0:07:34.320 let me see, just that he found that the loss 0:07:34.320 --> 0:07:38.320 to investors was one point seven billion and that the 0:07:38.400 --> 0:07:41.000 fact that they'll be paid in full is misleading, it's 0:07:41.040 --> 0:07:42.440 logically flawed. 0:07:42.080 --> 0:07:45.640 And it's speculative. So everything that the defense put out there, 0:07:46.200 --> 0:07:47.400 the judge just rejected. 0:07:48.080 --> 0:07:51.600 So next steps here think he goes back to this 0:07:51.440 --> 0:07:55.160 this peditentiary, I guess the detention center in Brooklyn. 0:07:55.320 --> 0:07:57.320 I think he will go back there for a bit 0:07:57.480 --> 0:08:00.840 until they decide, you know, where he is going to 0:08:01.000 --> 0:08:04.920 be in prison and where he's going to serve his sentence. 0:08:05.240 --> 0:08:07.560 And in the meantime, you know, it takes a while 0:08:07.680 --> 0:08:09.760 for an appeal to go through. You have to get 0:08:09.800 --> 0:08:13.160 all the documents and the trial transcripts and everything, so 0:08:13.200 --> 0:08:14.800 that's going to be a while. Then the next thing 0:08:14.840 --> 0:08:18.160 we'll hear about probably is where he's going to spend 0:08:18.200 --> 0:08:21.600 his sentence and also you know what the appeal is 0:08:21.640 --> 0:08:24.280 going to be about. That'll probably be you know, months 0:08:24.320 --> 0:08:25.720 and months, maybe a year down the road. 0:08:26.840 --> 0:08:29.440 Hey joining us also in our Bloomberg interarctor broker Stugo 0:08:29.440 --> 0:08:33.880 Peter Jeffrey joined us Bloomberg Legal editor Jeffrey, what's your 0:08:33.880 --> 0:08:36.479 takeaway from the sentence of twenty five years? 0:08:37.480 --> 0:08:41.320 Well, you could tell, as the judge prepared delivered his 0:08:41.400 --> 0:08:43.680 remarks before pronouncing the sentence, that it was going to 0:08:43.679 --> 0:08:46.480 be very stiff, nothing like the six and a half 0:08:46.559 --> 0:08:49.880 that the defense asked for, but not at the range 0:08:49.880 --> 0:08:51.720 of the forty to fifty the government wanted. It was 0:08:51.960 --> 0:08:54.360 sort of right in the middle. The judge hit him 0:08:54.360 --> 0:08:56.840 with three hundred months. We did some quick calculations. It 0:08:56.880 --> 0:08:59.400 was twenty five years, and it is just what the 0:08:59.480 --> 0:09:02.560 judge and had to do. It's a stiff deterrent to 0:09:02.600 --> 0:09:07.120 anybody who plays outside the lines in a sensitive area 0:09:07.240 --> 0:09:10.600 like crypto. And as you were saying, the judge just 0:09:10.720 --> 0:09:16.800 had no patience for the nonetheless excellent defense. A sentencing 0:09:16.840 --> 0:09:19.920 statement that his lawyer mckayzy made it was it was 0:09:20.000 --> 0:09:22.640 one of the best we'd heard. And yet the judge 0:09:22.679 --> 0:09:25.520 thought this won't fly. Look at what he did, and 0:09:25.559 --> 0:09:26.600 he didn't believe. 0:09:26.400 --> 0:09:28.520 He said that he was sorry, but the judge said, 0:09:28.800 --> 0:09:31.360 he has no apparent remorse, so he didn't believe the 0:09:31.400 --> 0:09:34.360 words that were coming out of SBF's mouth that this, 0:09:34.440 --> 0:09:37.000 I mean he made a statement, a twenty minute statement 0:09:37.040 --> 0:09:39.520 in which he said that, you know, he was sorry 0:09:39.559 --> 0:09:42.640 for what happened. I'm sorry about what happened. It haunts 0:09:42.679 --> 0:09:45.319 me every day. I made a series of bad decisions. 0:09:45.480 --> 0:09:48.800 They weren't selfish decisions, they weren't selfless decisions. They were 0:09:48.840 --> 0:09:52.560 bad decisions. And the judge just, yeah, didn't believe anything. 0:09:52.760 --> 0:09:56.200 And maybe most strikingly to me, the judge said, I've 0:09:56.240 --> 0:09:58.160 got to give you a sentence that is going to 0:09:58.200 --> 0:10:00.400 make sure you are not out on the street doing 0:10:00.440 --> 0:10:03.959 this again anytime soon. So we were all sitting around thinking, well, 0:10:03.960 --> 0:10:06.520 he's thirty two. That means he's getting at least twenty 0:10:07.000 --> 0:10:09.240 and you know, it's not a violent crime, but the 0:10:09.320 --> 0:10:11.960 judge was talking in terms almost in terms of the 0:10:12.120 --> 0:10:18.800 violence bankman Free did to investors, customers, employees. Yeah. 0:10:18.120 --> 0:10:20.240 Yeah, if you're just joining us, we just want to 0:10:20.280 --> 0:10:22.360 update you on the news. FTX co founder Sam bank 0:10:22.360 --> 0:10:24.480 And Freed has been sentenced to twenty five years in 0:10:24.520 --> 0:10:27.400 prison for stealing billions of dollars from customers. He's also 0:10:27.440 --> 0:10:30.200 been ordered to remit about eleven billion dollars. As we 0:10:30.280 --> 0:10:32.480 just did some quick math there, he'll be fifty seven now, 0:10:32.840 --> 0:10:35.320 when he gets out of prison. Joining us here is 0:10:35.360 --> 0:10:38.640 Peter Jeffrey, Bloomberg Legal editor joins us in June Grasso, 0:10:38.720 --> 0:10:41.000 a Bloomberg legal analyst. Peter, can you give us some 0:10:41.080 --> 0:10:44.679 just perspective and background here on this kind of sentencing, 0:10:44.840 --> 0:10:47.760 these kind of cases and kind of how we get here? 0:10:48.440 --> 0:10:52.000 Well, just thinking about it, Elizabeth Holmes got a little 0:10:52.000 --> 0:10:54.000 over eleven years for the Pharaohnose froue. 0:10:54.080 --> 0:10:56.000 Peter, gonna need you talking to them mind, Oh, I'm. 0:10:55.920 --> 0:10:59.080 Sorry, Elizabeth Holmes got it. That would help, right, got 0:10:59.120 --> 0:11:01.760 more than eleven years for the Pharohnise fraud. Bernie made 0:11:01.760 --> 0:11:06.360 off one hundred and fifty. And so this one is 0:11:06.400 --> 0:11:09.800 a stiff sentence that, as the judge suggested, I mean, 0:11:10.600 --> 0:11:12.480 you know, we did the math, like like you said, 0:11:12.480 --> 0:11:15.600 he'll be fifty seven when he gets out. 0:11:16.160 --> 0:11:20.800 And yeah, yeah, Paul is a prefect. 0:11:22.679 --> 0:11:24.880 But right, if you're looking for a sentence that will 0:11:24.920 --> 0:11:29.079 stop somebody from pursuing this kind of fraud again, a 0:11:29.160 --> 0:11:31.560 quarter of a century will do it, all. 0:11:31.520 --> 0:11:34.320 Right, So Juna, give us a sense of timing. Just 0:11:34.400 --> 0:11:35.160 as to the. 0:11:35.120 --> 0:11:38.439 Appeal, it's hard to it's hard to say how long 0:11:38.440 --> 0:11:41.080 the appeal will take. Because they have to. It's up 0:11:41.120 --> 0:11:44.120 to the defense to prepare the papers and to But 0:11:44.160 --> 0:11:46.200 I mean, I think it'll be months, maybe, I mean 0:11:46.240 --> 0:11:46.559 even a. 0:11:46.520 --> 0:11:46.920 Year, Peter. 0:11:46.960 --> 0:11:47.520 I think it could be. 0:11:47.720 --> 0:11:50.520 It would be a year. Of course, they'll be trying 0:11:50.559 --> 0:11:53.319 to put it in faster, but and then the prosecution 0:11:53.400 --> 0:11:56.520 gets a chance to respond. It's a long, long process. 0:11:56.640 --> 0:11:59.120 He'll have served years before we hear about what the 0:11:59.400 --> 0:12:03.520 appeal result is. And I mean, I don't think I mean, 0:12:03.520 --> 0:12:05.560 I think it's going to be a hard appeal to make. 0:12:05.920 --> 0:12:08.600 Well, I mean to the eleven billion dollars. Also, June, like, 0:12:09.080 --> 0:12:09.719 where is that? 0:12:09.880 --> 0:12:12.000 Like, I don't know where that is. 0:12:12.960 --> 0:12:14.360 I don't think he has eleven billion. 0:12:14.440 --> 0:12:16.440 He's not supposed to have eleven billion at this point. 0:12:16.480 --> 0:12:18.240 All Right, we're going to continue this conversation, but we're 0:12:18.280 --> 0:12:19.880 going to hand that off to our good friend Joe 0:12:19.920 --> 0:12:22.880 Matthew Balance of power. Joe's down in Washington, DC, and 0:12:22.960 --> 0:12:26.880 we're going to keep June in Peter as well. So Joe, 0:12:27.040 --> 0:12:29.600 big news here coming out of Lower Manhattan. 0:12:30.280 --> 0:12:31.360 That's for sure, Paul. 0:12:31.440 --> 0:12:31.760 Thanks. 0:12:32.240 --> 0:12:34.520 Of course, the story that's resonated here in Washington for 0:12:34.559 --> 0:12:36.600 a lot of different reasons and continues to when we 0:12:36.600 --> 0:12:40.040 talk about crypto on Capitol Hill, the idea of regulating this, 0:12:40.200 --> 0:12:44.320 the stand that lawmakers take on this issue. I'm glad 0:12:44.320 --> 0:12:46.600 to have Kaylee Lines at my side today. Kaylee has 0:12:46.600 --> 0:12:49.440 actually been covering this SBF story from the very beginning, 0:12:49.480 --> 0:12:52.360 remembering she was hosting our Crypto Show when that began, 0:12:52.440 --> 0:12:55.600 and has since come down to Washington to cover financial 0:12:55.600 --> 0:12:59.280 regulations and of course crypto. Kaylee, this this is a 0:12:59.440 --> 0:13:01.920 Washington's in a lot of ways that people might not 0:13:01.960 --> 0:13:05.600 see on the surface, knowing millions of dollars were donated 0:13:05.640 --> 0:13:09.240 to candidates in the way that SBF tried to influence 0:13:09.280 --> 0:13:09.960 a lot of races. 0:13:10.120 --> 0:13:13.840 Yeah, Sam Bankminfreed was incredibly politically active. He made donations 0:13:13.840 --> 0:13:15.880 on a bipartisan basis, but as you say, it was 0:13:16.240 --> 0:13:18.160 a significant amount of money, and he spent a lot 0:13:18.160 --> 0:13:21.040 of time physically here in Washington actually lobbying, not just 0:13:21.360 --> 0:13:24.280 on behalf of FTX, but he really became kind of 0:13:24.280 --> 0:13:27.760 a poster child and spokesperson for the industry, really advocating 0:13:27.760 --> 0:13:30.560 for crypto as a whole legislatively on the Hill, and 0:13:30.640 --> 0:13:33.720 a lot of lawmakers were quite burned ultimately when it 0:13:33.800 --> 0:13:37.439 turned out that FTX ultimately collapsed, and that has certainly 0:13:37.480 --> 0:13:39.839 continued to resonate as we talk about the difficulty of 0:13:39.880 --> 0:13:42.880 actually getting crypto legislation through the industry has had to 0:13:42.920 --> 0:13:45.200 work a lot harder on their lobbying efforts to try 0:13:45.240 --> 0:13:49.360 to delineate FTX from everything else in the industry, considering 0:13:49.440 --> 0:13:52.760 FTX was in many ways a centralized exchange, not necessarily 0:13:52.760 --> 0:13:55.480 the same decentralized model has a lot of this, but 0:13:55.679 --> 0:13:59.760 obviously this to a certain point will bring some closure 0:13:59.800 --> 0:14:03.240 to this. Sam Bankman freed specific case, keeping in mind 0:14:03.320 --> 0:14:07.360 that he was initially charged with violating campaign finance laws. 0:14:07.360 --> 0:14:09.680 They ultimately dropped the charge, so of the seven charges 0:14:09.720 --> 0:14:14.120 he was actually convicted of back in November, including conspiracy 0:14:14.200 --> 0:14:18.040 to commit fraud, et cetera, campaign finance violations were not 0:14:18.080 --> 0:14:20.200 in there. So this sentencing has nothing to do with 0:14:20.240 --> 0:14:22.760 his political activity, even if it's still had it. 0:14:22.760 --> 0:14:25.080 That's a really important point though, certainly for the people 0:14:25.120 --> 0:14:27.840 who are interested in politics and are used to what 0:14:27.880 --> 0:14:31.760 we talk about on this program. Had that charge stayed 0:14:31.800 --> 0:14:33.920 in place, that could have outed a lot of people 0:14:33.920 --> 0:14:34.920 in Washington. 0:14:34.520 --> 0:14:38.200 And certainly, yeah, it could have brought great politically political 0:14:38.200 --> 0:14:41.240 difficulty for many individuals, not just for Sam Bankman Free, 0:14:41.240 --> 0:14:44.040 because theoretically, had that been added, you could be talking 0:14:44.040 --> 0:14:47.520 about a sentence beyond twenty five years today. That said, still, 0:14:47.520 --> 0:14:50.840 this twenty five year sentence is significantly lower than what 0:14:50.880 --> 0:14:53.920 prosecutors were asking for. Obviously, they were pitching for forty 0:14:53.960 --> 0:14:56.280 to fifty years because of the scale of this fraud 0:14:56.720 --> 0:14:59.120 that they were describing, one of the largest and modern 0:14:59.120 --> 0:15:02.640 American financial history, with over a million victims, obviously ten 0:15:02.640 --> 0:15:06.480 billion dollars ultimately in terms of the size of the fraud. 0:15:06.960 --> 0:15:08.360 But we do have to keep in mind here that 0:15:08.400 --> 0:15:11.640 Sam bankman Fried is thirty two years old, as Alex 0:15:11.640 --> 0:15:13.840 and Paul and June were just discussing, So this is 0:15:13.880 --> 0:15:16.600 going to take him well into late middle age ultimately. 0:15:16.600 --> 0:15:19.720 If this sentence stands, obviously there will be an appeal process, 0:15:19.720 --> 0:15:21.080 but who knows how that will shake down. 0:15:21.160 --> 0:15:24.240 It's just amazing when you think about just the way 0:15:24.320 --> 0:15:27.920 human nature is at play in stories like these, Considering 0:15:28.040 --> 0:15:30.760 the paradise he was living in, he had it made. 0:15:30.960 --> 0:15:33.640 He was in the Bahamas living the life he dreamt of. 0:15:34.440 --> 0:15:36.680 He's been since living in Riker's Island. 0:15:36.960 --> 0:15:39.040 Yeah, I mean, he was a billionaire many times over, 0:15:39.080 --> 0:15:40.600 and now of course is part of this. He also 0:15:40.640 --> 0:15:42.760 has not just been sentenced to twenty five years in prison, 0:15:42.800 --> 0:15:46.400 but forfeiting eleven billion dollars and unclear where that eleven 0:15:46.400 --> 0:15:49.600 billion dollars comes from. All of his wealth was tied 0:15:49.680 --> 0:15:51.880 up in FTX, which is now a bankrupt and of 0:15:51.880 --> 0:15:54.520 course everything that can be salvage from that bankruptcy proje 0:15:54.560 --> 0:15:57.080 that process is going to be distributed to the customers 0:15:57.120 --> 0:15:59.760 and users who had money lost in this that, if 0:15:59.760 --> 0:16:02.160 any thing, might be. One of the more redeeming aspects 0:16:02.200 --> 0:16:04.440 of the argument that he and his legal team were 0:16:04.480 --> 0:16:06.680 able to make to Judge Kaplan was that a lot 0:16:06.680 --> 0:16:08.960 of these people will ultimately get most of their money 0:16:08.960 --> 0:16:12.680 back throughout that bankruptcy prodcast process, and so that may 0:16:12.720 --> 0:16:15.960 have helped him here. But yeah, the journey of Sam 0:16:16.000 --> 0:16:19.840 Bankman freed from this meteoric rise to one of the 0:16:19.880 --> 0:16:22.640 most well known individuals hanging out with Jaseel Bunchin and 0:16:22.680 --> 0:16:25.760 Tom Brady and yeah, right, incredibly popular, certainly a well 0:16:25.800 --> 0:16:27.880 known presence here in Washington, to now someone who is 0:16:27.920 --> 0:16:30.440 going to be in prison for a very large chunk 0:16:30.880 --> 0:16:33.600 of his life. It's a remarkable. 0:16:33.120 --> 0:16:35.760 Story spending time with Kaylee Lyons here a little earlier 0:16:35.760 --> 0:16:38.480 than usual on balance of power. If you're just joining 0:16:38.480 --> 0:16:41.840 a sentencing day for SBF and it is twenty five 0:16:41.920 --> 0:16:45.400 years in prison, I think June Grosso was suggesting that 0:16:45.400 --> 0:16:47.880 that could be knocked down. But that's the headline right now. 0:16:47.920 --> 0:16:50.960 And of course, to Kaylee's point, they were asking for 0:16:50.960 --> 0:16:53.000 forty to fifty years. So just for a little bit 0:16:53.040 --> 0:16:57.960 of perspective on this, you've been saying, of course asking questions, Kaylee, 0:16:58.000 --> 0:17:01.640 of lawmakers and regulators about cryptos. You moved to Washington. 0:17:01.680 --> 0:17:03.960 This is colored that debate in a lot of ways, 0:17:04.000 --> 0:17:05.960 where lawmakers feel free to say, you know what, this 0:17:06.680 --> 0:17:09.480 is a home for criminal activity, this is not a 0:17:09.640 --> 0:17:15.399 serious investment. Before this happened, there was more momentum, it seemed, 0:17:15.400 --> 0:17:18.240 on some of these issues. Where's any of this going now? 0:17:18.400 --> 0:17:20.439 Well, it's a great question. Where it's going in the 0:17:20.480 --> 0:17:23.240 House is probably very different than ultimately the question of 0:17:23.240 --> 0:17:25.879 whether it will pass the Senate or become law, because 0:17:25.880 --> 0:17:28.359 in the House you do have much more advocacy for 0:17:28.440 --> 0:17:31.080 the crypto industry in some of those lawmakers, including the chair, 0:17:31.400 --> 0:17:34.240 at least for now, with the Financial Services Committee, Patrick McHenry, 0:17:34.320 --> 0:17:38.159 and that committee has advanced multiple pieces of legislation that 0:17:38.200 --> 0:17:41.320 would in some ways perhaps legitimize the industry more by 0:17:41.320 --> 0:17:44.600 giving them the regulatory clarity they've been asking for, delineating 0:17:45.119 --> 0:17:48.640 what the CFTC or the SEC would have control over, 0:17:48.680 --> 0:17:51.120 including things to stable coins. Not all of this, of course, 0:17:51.160 --> 0:17:53.960 related to the business that FTX was conducting, but it 0:17:54.000 --> 0:17:56.520 has been used as an example for the counter arguments. 0:17:56.560 --> 0:18:00.080 Those who are more cryptoskeptical aren't in the majority in 0:18:00.080 --> 0:18:03.320 the House, but they are in the Senate. Shared Brown Is, 0:18:03.520 --> 0:18:05.760 obviously the head of the Senate Banking Committee, has been 0:18:05.880 --> 0:18:08.280 very reluctant to talk about any of this kind of 0:18:08.320 --> 0:18:11.359 legislation in any way that isn't more critical and skeptical 0:18:11.400 --> 0:18:13.760 of the industry. And he is facing a challenger of 0:18:13.800 --> 0:18:18.080 a pro crypto advocate in his Senate race in Ohio 0:18:18.160 --> 0:18:21.760 in November, Bernie Marino. So you're still seeing the politics 0:18:21.800 --> 0:18:24.040 around this industry playing out, and that goes well beyond 0:18:24.119 --> 0:18:26.040 just the legacy of zam Bankman. 0:18:25.800 --> 0:18:29.360 Freed got you. June Grosso is standing by a host 0:18:29.400 --> 0:18:31.960 of Bloomberg law in New York. Before we moved to 0:18:31.960 --> 0:18:35.760 a conversation with Governor Glegg ned Lamont of Connecticut. I 0:18:35.800 --> 0:18:38.639 just want to bring June in on this specific to 0:18:38.720 --> 0:18:41.160 the sentence. June, what options does he have now you've 0:18:41.200 --> 0:18:43.280 referred to an appeal. What happens next? 0:18:43.800 --> 0:18:46.280 Well, he'll have to serve eighty five percent of that 0:18:46.400 --> 0:18:49.800 sentence unless he wins on appeal, and of course the 0:18:49.840 --> 0:18:52.960 defense is going to appeal. He has changed his lawyers 0:18:53.000 --> 0:18:56.760 since the trial. He's hired Mark Mukasey, very famous, well 0:18:56.800 --> 0:19:00.760 known former pro federal prosecutor in New York. He represented 0:19:00.800 --> 0:19:04.000 Trevor Milton and did much better on the sentence. Treveror 0:19:04.040 --> 0:19:07.239 Milton got four years as opposed to the eleven that 0:19:07.320 --> 0:19:10.680 the prosecution wanted. So the next thing is an appeal 0:19:10.840 --> 0:19:14.000 and they'll go back through the trial there and find 0:19:14.200 --> 0:19:17.760 what they consider to be legal errors, and probably a 0:19:17.760 --> 0:19:20.399 lot of that will be some of the decisions that 0:19:20.480 --> 0:19:25.520 the judge made prior to trial. Even that limited sharply 0:19:25.600 --> 0:19:29.560 limited the defenses that Sam bankmin Freed could assert a trial, 0:19:29.640 --> 0:19:33.000 limited the expert witnesses he wanted to call. He really 0:19:33.080 --> 0:19:36.040 limited his case to a great extent. So I think 0:19:36.080 --> 0:19:38.520 that will be the basis of the appeal. It will 0:19:38.520 --> 0:19:41.720 be probably years before we know what you know how 0:19:41.760 --> 0:19:43.919 that appeal turns out, because it takes quite a bit 0:19:43.960 --> 0:19:46.560 of time to file the papers and have the responses. 0:19:47.680 --> 0:19:48.520 That's where we stand.