Date: 2025-04-04 Page is: DBtxt003.php txt00025808
CRYPTO
THE SBF/FTX SAGA
SBF’s Inner Circle Delivered a Conviction. What’s Next for Them?
THE SBF/FTX SAGA
SBF’s Inner Circle Delivered a Conviction. What’s Next for Them?
Original article:
Peter Burgess COMMENTARY
Peter Burgess
https://www.bloomberg.com/news/videos/2023-11-03/bankman-fried-found-guilty-of-fraud-at-ftx-trial-video SBF’s Inner Circle Delivered a Conviction. What’s Next for Them?
- Ellison, Wang and Singh were star prosecution trial witnesses
- They pleaded guilty but can expect leniency for cooperating
Caroline Ellison arrives to court in New York on Oct. 12.Photographer: Stephanie Keith/Bloomberg
Their testimony was bolstered by the fact they already pleaded guilty to the crime themselves as part of cooperation deals with prosecutors.
It’s no secret that cooperating witnesses usually get leniency, especially if they help deliver a bigger fish for the government. And the conviction of Bankman-Fried, who was one of the biggest names in the crypto industry, definitely fits that bill.
Mob underboss Sammy “the Bull” Gravano got only five years in prison, despite confessing to 19 murders, in recognition of his testimony against John Gotti, who got life. Enron Corp. Chief Financial Officer Andrew Fastow got six years in prison for his role in that massive corporate fraud after testifying against CEO Jeffrey Skilling, who was sentenced to 24 years, though that was later reduced to 14.
Gary Wang on Oct. 10. ... Photographer: Yuki Iwamura/Bloomberg
Ellison, Wang and Singh will likely get no or very little prison time for their testimony, several criminal defense lawyers who’ve followed the case said. That compares to the decades in prison Bankman-Fried possibly faces when he’s sentenced in March.
The three will likely be sentenced after him, and prosecutors will submit a letter to the judge outlining the value of their cooperation. Judges are not bound by such letters, but they usually go along, in part to encourage other witnesses in other cases to testify.
Wang said during the trial that he is hoping for “ideally, no time,” in prison when asked by prosecutors.
If they do get some jail time, it will likely be relatively short, and there’s a good chance they’ll serve it at a minimum security camp holding only non-violent offenders, said Justin Paperny, a former UBS Group AG broker who previously served 18 months for fraud.
But even if they avoid jail, Ellison, Wang and Singh are likely to face other forms of punishment. The government could force the three to return money they made from fraud and pay restitution to their victims. Given that the government says FTX customers lost billions, that could be a substantial burden. Fastow was ordered to surrender $20 million over his role in Enron’s $60 billion collapse.
“If you are joining Team USA, you are required to make financial remuneration consistent with the facts,” said Tim Howard, a former federal prosecutor in Manhattan. “You don’t get a break on that.”
Nishad Singh on Oct. 17. ... Photographer: Stephanie Keith/Bloomberg
Paperny, now a consultant who works with white-collar defendants facing prison time, said he answered phones for minimum wage after his release to help pay a $535,000 restitution order. The Justice Department can pursue payment for 20 years.
“They’re very aggressive in collecting,” said Paperny. “You can’t sell your home or refinance it because those proceeds go to the government.” He said he finally paid off his restitution in 2019.
Singh has already agreed to surrender many assets he acquired while working at FTX or Alameda, including a $3.7 million home he bought in Washington state’s scenic San Juan Islands. He also agreed to turn over shares in the artificial intelligence startup Anthropic PBC that he bought for $40 million, an investment that has only increased in value since the FTX meltdown.
As they are all still relatively young, Ellison, Wang and Singh will further face the challenge of charting new careers with their involvement in FTX’s collapse potentially stigmatizing them with future employers.
All three attended prestigious universities — Ellison is a Stanford grad and Wang was Bankman-Fried’s roommate at the Massachusetts Institute of Technology, but crypto, finance and any other field where they might hold other people’s money are probably off-limits.
“The risk is just too high for the investors,” said Chris Rice, a partner with tech executive recruiting firm Riviera Partners. “I don’t think that they’re going to be able to operate at the same level within an organization as they had in the past.”