Sam Bankman-Fried: Can Biden's pardon save the FTX founder from a 25-year sentence?

The collapse of FTX remains one of the biggest financial scandals in the history of the cryptocurrency industry. Sam Bankman-Fried, once a prominent platform founder, received a 25-year sentence in 2024 for fraud and money laundering. However, debates have reignited within the crypto community and political circles: could a presidential pardon change his fate?

History of Political Donations and Their Influence on Judicial Decisions

The discussion around the potential pardon of Sam Bankman-Fried cannot be considered in isolation from the historical context. Political donors have traditionally received more favorable treatment when it comes to sentencing mitigation or amnesty.

In 2020, during FTX’s rapid growth, Sam Bankman-Fried donated $5.2 million to a super PAC supporting Biden’s candidacy. This contribution made him the second-largest private donor to the Democratic Party, after Michael Bloomberg. Whether this financial support will influence the head of state’s decision regarding a pardon remains an open question and has sparked mixed reactions in society.

Precedents: When Political Connections Determined Court Outcomes

It’s worth recalling cases that have become classic examples of political influence on judicial decisions. The infamous oil trader Mark Rich evaded justice for over half a century, avoiding paying at least $50 million in taxes. Yet, on his last day in the White House, President Clinton pardoned him. Notably, Rich’s ex-wife, Denise, was a major Democratic Party donor and active philanthropist who contributed significant sums to Clinton’s presidential library.

A similar pattern was observed during the Trump administration. Paul Pogg, convicted of tax fraud, received a pardon in 2020. Reports indicated that Pogg’s family donated over $200,000 to Trump’s campaign just prior to the pardon.

These precedents create an atmosphere where assumptions about a possible pardon for Sam Bankman-Fried do not seem unfounded.

Controversial Aspects of the Trial and Its Outcome

The trial of Sam Bankman-Fried itself contained several unusual elements. Initially, he faced eight criminal charges, including conspiracy to deceive and violations of campaign finance laws. However, in July 2023, charges related to campaign funding were dropped due to an extradition agreement with the Bahamas.

A second trial was planned to consider these dropped charges along with other crimes related to corruption and illegal transfer activities. Nevertheless, in December 2023, prosecutors announced they would forgo the second trial, citing that the evidence presented largely duplicated the material from the first trial.

The court’s decision to sentence him to 25 years drew criticism from the crypto community. Prosecutors initially demanded 50 years, citing the unprecedented scale of the crimes and the enormous losses suffered by FTX clients. The platform’s collapse caused damages exceeding $16 billion to investors and creditors, while the overall cryptocurrency market lost about $100 billion in market value.

Unequal Punishments as a Source of Public Discontent

There is concern over the uneven punishments handed to other figures involved in the scandal. Carolina Ellison, a key figure in illegally transferring FTX client funds to Alameda Research, received only two years in prison in exchange for cooperating with federal authorities.

Even more striking is the case of Gary Wang, the engineer who developed the backdoor code allowing Alameda to obtain unlimited credit. Contrary to expectations, Wang avoided imprisonment entirely through an agreement with prosecutors.

This disparity in punishments has fueled suspicions that the justice system may be vulnerable to external pressure and political influence.

Prediction Markets and Probabilities of Pardon

Prediction platforms provide interesting data on how various experts and market participants assess the likelihood of a pardon. On Kalshi, a 12% probability was registered, indicating an average but not negligible chance that President Biden might consider granting amnesty.

An intriguing fact: Sam Bankman-Fried directed the overwhelming majority of his political donations (98%) to Democratic candidates, further highlighting his significant role in political financing.

Probability as an Ethical Dilemma

Recent presidential pardons, such as Biden’s clemency for Michael Conahan, convicted of corruption related to the “kids for money” scandal, demonstrate the willingness of the head of state to use pardon powers even for individuals who committed serious crimes. This sets a precedent and raises the question of whether pardons are tools primarily accessible to influential and financially well-off people.

Leading attorney Richard W. Painter sharply criticized this situation, stating that if the president agrees to pardon Sam Bankman-Fried in exchange for stolen political donations, it would constitute bribery worthy of impeachment.

Conclusion: Uncertainty and Questions of Justice

Whether Sam Bankman-Fried will receive a pardon from Biden remains an open question. Historical practice shows that political donors often receive favorable consideration for clemency requests. At the same time, it is important to recognize that establishing a direct causal link between donations and pardons is difficult with absolute certainty. Presidents may be guided by various motives when making such decisions.

However, one thing is undeniable: the possibility that influential and wealthy individuals can buy “insurance” against serious criminal penalties through political contributions poses a serious challenge to democratic principles of justice and equality before the law.