Sam Bankman-Fried (SBF) of FTX may soon be free if rumors of the president's pardon are true.
It all started after Wall Street Mav tweeted:
"Guess who might be pardoned by President Biden soon. The second-largest donor to the Democratic Party."
Then, Elon Musk fueled the hype by saying:
"I would be shocked if this doesn't happen."
SBF is currently being held at Mendota Federal Prison, serving a 25-year sentence for orchestrating one of the largest financial scandals in modern history.
Convicted in November 2023 on charges of fraud and conspiracy to defraud clients, his case has become a political minefield.
From crypto king to anonymous prisoner
At its peak, SBF launched FTX in 2019 and built it into a 32 billion USD empire in just about two years. Over 1 million users trusted the platform with their assets. Then, in November 2022, FTX collapsed faster than the rug pull of meme projects.
Customers rushed to withdraw billions of USD, causing a liquidity crisis. Within days, the exchange filed for bankruptcy and SBF was arrested in the Bahamas at the request of the U.S. extradition.
Back in 2023, things were even worse. Prosecutors stated that SBF had embezzled billions of USD from FTX users to cover losses at the Alameda Research hedge fund. These funds were also used to pay for luxury items, including a 30 million USD penthouse in the Bahamas.
SBF's defense team described Sam as an innocent nerd. The jury did not believe that. By March of this year, he had been sentenced to 25 years in prison and had assets worth 11.02 billion USD seized.
Even if his prison time is reduced for good behavior under federal regulations, SBF will still have to serve until he is 40 years old before being released. Unless President Joe Biden has other plans.
Why can Biden intervene?
SBF not only ran a crypto exchange, he also managed political donations. In just 18 months, Sam spent over 70 million USD on political campaigns, making him one of the top donors in U.S. history.
More than half of that, about 40 million USD, was transferred directly to the Democratic Party in the 2022 midterm elections. This figure is only second to George Soros.
The Protect Our Future PAC campaign, promoting pandemic preparedness, received 27 million USD, and the House Majority PAC received 6 million USD. Even the DCCC Committee pocketed $250,000.
Democratic members supporting crypto, such as Kirsten Gillibrand, Cory Booker, and Maggie Hassan, each received $5,800, the maximum contribution allowed per individual.
SBF also used dark funds to donate a similar amount to Republican candidates. If true, that donation could equal or even exceed what Sam donated to the Democratic Party.
No one can guess the exact number, but their value must be in the tens of millions of USD.
Prison time, appeals, and the possibility of not being pardoned
After sentencing, SBF was transferred to Mendota, a federal prison in California. This facility provides a medium-security area.
Meanwhile, lawyers are busy filing appeals. They argue that procedural errors during the trial violated Sam's rights.
Appeals in federal court rarely succeed, with only about 10% of cases being reconsidered. However, SBF is relying on his legal team to reduce his sentence.
Thanks to the First Step Act, a federal law dedicated to reducing sentences for non-violent offenders, SBF could significantly shorten his prison time. With good behavior, SBF could be released in just 12.5 years.
Public reaction
Victims of the FTX collapse, who lost billions of USD, view SBF as a symbol of betrayal. John Ray, tasked with cleaning up the mess at the exchange, has repeatedly emphasized the harm caused by SBF's actions. Meanwhile, SBF's defense team claims that "no one is a victim" in this crime.
A YouGov survey shows that 37% of Americans have a positive view of SBF. 13% have a negative view. The rest do not know or do not care. Among those interested in the trial, 73% believe Sam should be imprisoned.
If Biden actually grants clemency, backlash may erupt. Critics will accuse him of partisanship, especially considering SBF's financial ties to the Democratic Party. On the other hand, the White House may have a different perspective, as clemency often serves political purposes.
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