Opinion: The important irony in SBF’s sentencing






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Amr Alfiky/Reuters

FTX founder Sam Bankman-Fried leaves the United States Courthouse in New York City, July 26, 2023.

Editor’s Note: Howard Fischer is a lawyer practicing at the law firm Moses Singer LLP in New York and former senior trial counsel with the Securities and Exchange Commission. The opinions expressed in this commentary are his own. Read more opinion at CNN.



CNN

In considering the fairness of the upcoming sentencing of FTX founder Sam Bankman-Fried, who faces a potential sentence of up to a century, a classic of French literature comes to mind. In Voltaire’s 1759 masterwork, “Candide,” a character justifies the execution of Admiral John Byng as a scapegoat for English military failures with the phrase “pour encourager les autres,” or in English, “to encourage the others.” That is, the execution of one admiral would warn the other admirals not to lose their battles.

Katherine McCaffrey

Howard Fischer

While Bankman-Fried is not threatened by a firing squad, he does face the potential of a decades-long sentence that will ensure he dies an old man in prison. While it is perhaps a bit of a stretch to paint him as a scapegoat like poor Admiral Byng, it is fair to question the appropriateness of a sentence that will potentially dwarf that of many violent offenders; especially since it now appears (at least according to the sentencing memorandum submitted by Bankman-Fried’s counsel) that actual losses to customers from his fraud might not be substantial.

So why the severity? That Bankman-Fried is likely to get a sentence measured in decades has to be seen not simply as an assessment of his individual culpability, but as a social judgment, as part of a broader attempt to impose standardized norms of corporate governance and behavior on an upstart industry.

Crypto proponents have long chafed at efforts by regulators to force them within the confines of the traditional financial system. Many have accused the SEC (and other enforcement agencies) of trying to force new wine into old bottles, either by ignoring the essential elements of cryptocurrency as a commodity, rather than as a security, as SEC Commissioner Hester Peirce recently noted, or of attempting to quash competitors to the traditional finance participants.

Bankman-Fried is reportedly an adherent of “effective altruism,” described as the belief that one should act so as to maximize social benefits to others. As such, he would likely have tolerated a sacrifice for the greater good, to “encourage the others.” His lifelong incarceration might be the sacrifice needed to tame cryptoworld and make it more palatable for general use. One wonders if he appreciates the irony.


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