Gearing up for Sam Bankman Fried's (and CZ's) reckoning

Former FTX CEO Sam Brankman-Fried (SBF) will be sentenced in New York City's federal court on Thursday, after being convicted of defrauding the crypto exchange's customers and investors.

Why it matters: The disgraced entrepreneur is among a small cadre of tech execs to be convicted of fraud — and given the eye-popping dollars involved in the scheme, he could get a multi-decade sentence.

Catch up quick: On Nov. 2, Bankman-Fried was convicted of all seven charges, less than a year after Southern District of New York prosecutors charged him and later extradited him from the Bahamas.

The charges included defrauding FTX customers, investors and investment firm Alameda's lenders, and conspiracy to commit money laundering.

The prosecution: Federal prosecutors have asked that Bankman-Fried be sentenced to 40 to 50 years in prison "to reflect the seriousness of the defendant's crimes," U.S. Attorney Damian Williams told the court this month.

"You had some pretty strong victim letters in which they talked about … the emotional and financial toll," Reed Smith partner Mark E. Bini tells Axios. Prosecutors also alleged that he lied under oath and thus should not be let off the hook.

Meanwhile, FTX CEO John Ray III said in a written statement to the court this week that "the 'business' he left on November 11, 2022, was neither solvent nor safe," pushing back on his predecessor's claims that customer losses were zero.

The defense: Bankman-Fried's lawyers, on the other hand, have argued that he should be sentenced to only five to seven years.

The rationale: FTX customers have (or will get) their money back given the status of the exchange's bankruptcy proceedings. "The money was there — not lost," they argue. (Customers, however, disagree.) The lawyers say SBF's medical conditions, plus the expectation that FTX customers will be made whole, should be factored into the sentence.

Between the lines: "Mr. Bankman-Fried's argument is almost a double-edged sword because if it fails, the court may conclude that he shows no remorse and does not accept responsibility for his conduct," Oleg Nekritin, defense attorney at the law offices of Robert J. DeGroot, tells Axios via email.

Bini points out that Bankman-Fried's perceived attempt to intimidate Caroline Ellison, a cooperating witness and his former colleague and girlfriend, is not likely to be taken lightly by the judge.

Yes, but: Experts are predicting his sentence will likely be closer to what prosecutors are asking for than the 6.5 years Bankman-Fried is positing. "I don't think there's any way he gets less than 30 years in prison," Bini says, adding that the prosecution's request for 50 years is likely to seem quite reasonable compared with the 110 years suggested by sentencing guidelines.

The intrigue: Four of Bankman-Fried's former colleagues have pleaded guilty and cooperated with the government's investigations, but their fates are currently unclear.

In a ironic twist, SBF's nemesis — former Binance CEO Changpeng Zhao (CZ) — is also awaiting sentencing, scheduled for April 30.