Sam Bankman-Fried FTX fraud victim tells judge: ‘My whole life has been destroyed’
NEW YORK, US – JANUARY 03: Sam Bankman-Fried leaves the court in New York, on January 03, 2023.
Fatih Aktas | Anadolu Agency | Getty Images
In a letter to the Department of Justice, an FTX customer who lost $4 million when the exchange filed for bankruptcy in 2022 expressed disgust at a circulating narrative that clients of the crypto exchange would ever be made whole.
“I have scraped the docket of scheduled claims and calculated the exact amount stolen,” wrote the former FTX customer, whose identity has been concealed by the government. “The total value of customer liabilities is $19,722,911,002.84.”
This week, that letter ended up on the desk of U.S. District Judge Lewis Kaplan, who on Thursday will inform FTX founder Sam Bankman-Fried of his prison sentence stemming from his role in the collapse of the exchange. At 9:30 a.m., sentencing proceedings will take place on the 26th floor of the federal courthouse in downtown Manhattan, the same place where a jury found the former crypto executive guilty of all seven criminal counts against him in November.
The victim, who wrote that 30 years worth of savings had been deposited into FTX three months before the exchange collapsed, is part of a last-minute push by prosecutors to sway Judge Kaplan ahead of the sentencing.
“My whole life has been destroyed,” the person wrote. “I have 2 young children, one born right before the collapse. Beyond the money, I lost my happiness, my ability to get out of bed, my desire to continue living. My wife is suicidal and depressed.”
The same sorts of stories were told during Bankman-Fried’s monthlong criminal trial last year. Prosecutors won their case by convincing jurors that Bankman-Fried had stolen at least $8 billion from customers. For some people, that meant financial ruin.
“In its sentencing submission, the prosecution has included moving accounts from FTX’s former customers that speak to the devastation experienced by those losing their money, the uncertainty of wondering whether they might ever get any of it back, and dealing with the emotional fallout of being duped,” said Yesha Yadav, law professor and Associate Dean at Vanderbilt University. “These victim impact statements can be very powerful.”
Bankman-Fried, 32, faces a maximum sentence of more than 100 years in prison, though the government has suggested a sentence in the range of 40 to 50 years. The defense is angling for no more than 6.5 years.
For months, Judge Kaplan has been weighing the appropriate punishment for Bankman-Fried’s crimes related to the implosion of his $32 billion crypto empire.
CNBC spoke to former federal prosecutors, trial attorneys, and a mix of lawyers working to defend white collar criminals to get their take on what to expect on Thursday.
Damaging testimony
Bankman-Fried was convicted of wire fraud and conspiracy to commit wire fraud against FTX customers and against lenders to sister hedge fund Alameda Research, as well as conspiracy to commit securities fraud and conspiracy to commit commodities fraud against FTX investors, and conspiracy to commit money laundering.
The defense team has argued that Bankman-Fried’s sentence should reflect the potential that FTX customers will be paid back in part or in full. The likelihood of that scenario has increased in recent months thanks to the rising value of cryptocurrencies and other assets FTX owned, such as its stake in artificial intelligence startup Anthropic.
Even as the bankruptcy estate promises to pay customers back, many of FTX’s thousands of victims argue that their crypto stakes have been significantly undervalued by the exchange’s new leadership team.
“A lot will be said about the loss at the time of the conduct, not the recovery or potential recovery after it was discovered,” said former federal and state prosecutor David Weinstein, who now practices as a corporate compliance and white collar defense attorney at Jones Walker. Weinstein said he expects to see a sentence in the range of 30 to 40 years.
Mark Bini, a former state and federal prosecutor and U.S. assistant attorney who specialized in financial crimes, anticipates a sentence of no less than 30 years.
“Probation calculates the guidelines at 110 years,” said Bini, who currently represents white collar crypto defendants as part of law firm Reed Smith’s On Chain digital asset team. “I think the judge is likely to side with probation and the government on the loss amount and the appropriate guidelines.”
Caroline Ellison, former chief executive officer of Alameda Research LLC, arrives to court in New York, US, on Thursday, Oct. 12, 2023.
Bloomberg | Bloomberg | Getty Images
Judge Kaplan, 78, is a veteran of the Southern District of New York and has presided over some of the biggest cases to roll through his courthouse. He showed little patience for Bankman-Fried during the defendant’s four days on the stand.
“Unfortunately for SBF, some of his testimony at trial came across as highly evasive, somewhat cold and often contradictory,” said Yadav, adding that a sentence of 20 to 25 years could offer Judge Kaplan a way to balance the severity of the crime with a recognition of customer recoveries and the potential for future rehabilitation.
Former federal prosecutor Neama Rahmani described Kaplan as “old school” and predicted a sentence of 20 to 30 years.
Tre Lovell, a Los Angeles corporate law attorney, said the core factors Kaplan will consider will be the extent of the fraud, along with the fact that Bankman-Fried appeared to have lied under oath while showing little remorse.
“The judge isn’t going to cut Bankman-Fried a break just because FTX has recovered a lot of funds to offset the amount that customers lost,” Lovell said. “The judge is just going to look at Bankman-Fried’s conduct at the time he was in charge of the company, not what the company did after he stepped down as CEO.”
Bankman-Fried has one last chance to take the stand in front of the judge in order to show some level of contrition and a promise to become a benefit to society.
“If he says he’s had a chance to think about what he did and that he’s very sorry for misusing the hard-won funds of investors, and that he wants to use his acumen in this field for the public good, then he may walk out with a prison sentence that is south of 20 years,” Lovell said. “In court, it’s never too late to say you’re sorry. But he won’t get a big discount on his sentence just for being contrite.”
WATCH: Prosecutors recommend a 40-50 year prison sentence for Bankman-Fried
A California judge ruled late Tuesday afternoon that Tesla engaged in “deceptive marketing” in reference to its Full Self-Driving system, and that Tesla’s license to sell and produce cars in the state should be revoked for 30 days.
However, the California DMV has said it will give Tesla 60 days to comply and fix its marketing before going through with the suspension.
The ruling is big news in a case that has been ongoing for years now.
Tesla has been selling level 2 driver assist software since 2016 which it calls “Full Self-Driving” (FSD), despite that this software did not (and still does not) make its cars capable of driving themselves.
This name has attracted much consternation over the years, becoming more absurd as each of Tesla’s predicted deadlines for the advent of full autonomy blow by.
Tesla also provides software under the name “Autopilot,” another term that evokes some level of autonomy, though perhaps not as explicitly as the aforementioned FSD. Tesla long held the position that this word is meant to evoke airplane-like systems that still require a pilot, but can just do most of the work for them.
So eventually, in 2021, the California Department of Motor Vehicles (DMV) officially started an investigation into Tesla’s marketing claims, to determine whether the company had lied to consumers.
California found that the company was saying different things to the public than it was saying to the DMV.
The DMV then sent an official inquiry to Tesla in 2022, asking for it to respond to the claim that it was creating incorrect perceptions about the capabilities of its system. Tesla’s response stated that it had been allowed to lie about FSD for so long that it should get to keep going, which was apparently not persuasive enough to the courts, and the case was then slated for trial.
During this time, the California legislature got involved as well, passing a law that specifically banned automakers from deceiving consumers into thinking vehicles have more autonomous capabilities than they do.
Well, after all these investigations and waiting, we finally have an an answer, and the judge’s ruling makes it quite clear: Tesla lied to consumers about its autonomous capabilities.
California court rules Tesla lied about autonomy
The court looked at Tesla’s marketing claims and also at surveys of people exposed to those claims and their opinion of whether a Tesla would be able to drive itself, given the marketing messages put out by the company.
It found problems both with the word Autopilot and the phrase Full Self-Driving.
The word “Autopilot” was not found to be “unambiguously false,” but the court said that its use “follows a long but unlawful tradition of ‘intentionally (using) ambiguity to mislead consumers while maintaining some level of deniability about the intended meaning.’” The court found that a reasonable person could believe that a car on Autopilot doesn’t require their constant undivided attention, which is incorrect as the driver is still fully responsible for the vehicle.
On “Full Self-Driving,” the court was even more harsh. It found that this feature name is “actually, unambiguously false and counterfactual” (comically, Tesla tried to argue here that “no reasonable person” could believe that Full Self-Driving actually means Full Self-Driving).
The court noted other language used by Tesla, including marketing copy that said “the system is designed to be able to conduct short and long distance trips with no action required by the person in the driver’s seat,” and suggested that “legal reasons” are the only things holding Tesla back from full autonomy. Tesla tried to say that this was a statement of future intent, but the court found that its use of the present tense shows otherwise.
Tesla has repeatedly changed its wording around FSD, first calling it Full Self-Driving Capability, then changing that to Full Self-Driving (Supervised) to emphasize the need for a driver to supervise the vehicle. The court noted these changes, and then said it would not be a burden to force Tesla to change its marketing further to clarify that its cars do not drive themselves.
The DMV could now shut Tesla down for 30 days if it does not comply
Which leads us to the proposed legal remedy: the court said that the DMV could suspend or revoke Tesla’s licenses for 30 days, stopping its ability to sell or build cars in the state.
Tesla’s first factory is in Fremont, California, where it still builds around half a million vehicles a year and employs some ~20,000 employees. Tesla says this remedy would be “draconian,” but the court said that without this option, there’s no reason to believe Tesla would stop its misrepresentations to the public.
The court also examined the possibility of financial restitution, but deemed that inappropriate. Since the case did not establish any quantifiable financial harm done by Tesla’s misrepresentation and noted the impracticality of accounting for that harm.
This ruling does not yet mean that Tesla can’t sell cars in California, which is its largest market in the US by far. The court noted that the DMV has the option of suspension or revocation, which the DMV can do at its discretion. And the DMV has said that it will allow Tesla 60 days to comply with the order before it takes action, and that it would focus on Tesla’s dealer license rather than its manufacturing license.
This would mean, specifically, that Tesla not refer to a level 2 driving system as “Autopilot” or using language that suggests these vehicles are autonomous. It will have to change its marketing materials and stop making public statements misleading the public about its autonomous capabilities.
Tesla said after the ruling that “sales in California will continue uninterrupted.” But we’ll see what happens in 60 days, and what sort of changes Tesla does or does not make to its deceptive marketing.
Tuesday’s ruling is just one of many legal cases against Tesla right now, specifically having to do with FSD. One relevant case is a class action lawsuit in California claiming Tesla misled customers about its cars self-driving capabilities. This ruling could provide fuel for that lawsuit, given a California judge has already gone on the record with an official determination that Tesla misled the public about FSD.
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Rad Power Bikes has filed for Chapter 11 bankruptcy protection, marking a dramatic turn for one of the most recognizable names in the US electric bike industry. The Seattle-based company entered bankruptcy court this week as part of a plan to sell the business within the next 45–60 days, while continuing to operate during the process.
Court filings show Rad listing roughly $32.1 million in assets against $72.8 million in liabilities. A significant portion of that debt includes more than $8.3 million owed to US Customs and Border Protection for unpaid import tariffs, along with millions more owed to overseas manufacturing partners in China and Thailand. The company’s remaining inventory of e-bikes, spare parts, and accessories is valued at just over $14 million. Founder Mike Radenbaugh remains the largest equity holder, with just over 41% ownership.
The bankruptcy filing comes less than a month after the US Consumer Product Safety Commission issued a rare public warning urging consumers to immediately stop using certain older Rad lithium-ion batteries, citing fire risks, particularly when certain batteries are exposed to water and debris. Rad pushed back on the agency’s characterization, stating that its batteries were tested by third-party labs and deemed compliant with industry safety standards, and touting its SafeShield batteries – another, more recent version of Rad’s battery introduced last year that is likely one of the safest e-bike batteries in the industry.
Financial pressure had been building steadily on the company. In early November, Rad Power Bikes issued a WARN notice to Washington state officials, indicating that up to 64 employees could be laid off in January, and warning that the company could shut down entirely if additional funding was not secured. That notice now reads as an early signal of the restructuring that has followed.
Chapter 11 bankruptcy is not the end of a company, and in this case, it allows Rad to continue operating while restructuring its debts under court supervision, pausing most litigation and collection efforts through an automatic stay. The company says it plans to keep selling bikes and supporting customers during the process as it works toward a sale.
The filing caps an unfortunate fall from grace for a brand that raised hundreds of millions of dollars in several funding rounds during the pandemic years. After years as a dominant force in the direct-to-consumer e-bike market, Rad now faces an uncertain future shaped by tightening margins, regulatory scrutiny, and unresolved legal and financial challenges.
via Bicycle Retailer
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As Texas braces for tighter power margins and record demand on the ERCOT grid, Sunrun and NRG Energy are transforming home batteries into a giant virtual power plant. The two companies are integrating more home battery storage into the grid and tapping those batteries when the state needs power the most.
The solar + storage provider and energy company announced a new multi-year partnership aimed at accelerating the adoption of distributed energy in Texas, with a focus on solar-plus-storage systems that can be aggregated and dispatched during periods of high demand. The idea is simple: use home batteries as a flexible, on‑demand power source to help meet Texas’s rapidly growing electricity needs.
Under the deal, Texas homeowners will be offered a bundled home energy setup that pairs Sunrun’s solar and battery systems with retail electricity plans from NRG’s Texas provider, Reliant. Customers will also get smart battery programming designed to optimize when their batteries charge and discharge. As new and existing Sunrun customers enroll with Reliant, their combined battery capacity will be made available to support the ERCOT grid during times of stress.
“This partnership is a major step in achieving our goal of creating a 1 GW virtual power plant by 2035,” said Brad Bentley, President of NRG Consumer. “By teaming up with Sunrun, we’re unlocking a new source of dispatchable, flexible energy while giving customers the opportunity to unlock value from their homes and contribute to a more resilient grid.”
Sunrun, which has one of the largest fleets of residential batteries in the US, will be paid for aggregating the capacity, and participating Reliant customers will be compensated by Sunrun for sharing their stored solar energy.
The arrangement gives Texas households a way to earn money from their batteries while also improving grid reliability in a state that continues to see rapid population growth, extreme weather, and rising electricity demand.
Read more: The US’s first residential V2G power plant is running on Ford F-150 Lightning trucks
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