Bankman-Fried may face 'very long sentence' if convicted, judge says

© Reuters. FILE PHOTO: Sam Bankman-Fried, the founder of bankrupt cryptocurrency exchange FTX, arrives at court as lawyers push to persuade the judge overseeing his fraud case not to jail him ahead of trial, at a courthouse in New York, U.S., August 11, 2023. REUTE

By Luc Cohen

NEW YORK (Reuters) - Sam Bankman-Fried, the indicted founder of now-bankrupt cryptocurrency exchange FTX, may face a "very long sentence" if convicted at his fraud trial starting next week, the judge overseeing the case said on Thursday.

U.S. District Judge Lewis Kaplan's comments came just before he denied the 31-year-old former billionaire's request to be released from jail temporarily during the trial to better help his lawyers mount his defense case. Kaplan said Bankman-Fried was a flight risk.

"Your client in the event of conviction could be looking at a very long sentence," Kaplan said in a hearing in Manhattan federal court. "If things begin to look bleak … maybe the time would come when he would seek to flee."

Mark Cohen, Bankman-Fried's lawyer, said there was "nothing in the record" to suggest that his client would try to flee. He said Bankman-Fried had voluntarily consented to extradition from the Bahamas - where FTX was based - to the United States after his December 2022 arrest.

Bankman-Fried has pleaded not guilty to seven counts of fraud and conspiracy stemming from FTX's collapse in November 2022. He faces a statutory maximum of 110 years in prison, though any sentence would be determined by Kaplan based on a range of factors and he would likely get far less.

His lawyers asked Kaplan for temporary release earlier this week, arguing they could not speak with him after each trial day to prepare for the next day's witnesses and testimony, which they could not do if he were taken back to the Metropolitan Detention Center in Brooklyn at the end of each trial day.

Kaplan said on Thursday he was sympathetic to the defense's concerns, and would arrange for Bankman-Fried to arrive to court at 7 a.m. on most trial days to speak with his lawyers for several hours before testimony begins.

Prosecutors say Bankman-Fried stole billions of dollars in FTX customer deposits to plug losses at Alameda Research, a crypto-focused hedge fund he controlled.

They opposed Bankman-Fried's request for temporary release. On Thursday, prosecutor Danielle Kudla told Kaplan that Bankman-Fried had "ample opportunity to prepare for trial" during the 7-1/2 months he was free on bail at his parents' Palo Alto, California, home.

Kaplan jailed him on Aug. 11 after finding he likely tampered with witnesses at least twice - including by sharing former Alameda chief executive officer Caroline Ellison's private writings with a New York Times reporter.

Ellison, also Bankman-Fried's former romantic partner, is one of three former members of his inner circle who have pleaded guilty to fraud and are set to testify against him. Former FTX executives Gary Wang and Nishad Singh have also agreed to testify.

Kaplan said on Thursday that prosecutors had requested that he grant two additional witnesses immunity from being charged with crimes in exchange for their testimony. He did not identify those witnesses.

The trial starts on Oct. 3 and could last up to six weeks.