Three Arrows Capital co-founder Zhu arrested in Singapore airport, sentenced four months in prison

‘I’ve had cooperating witnesses who did get jail time, but it’s the exception not the rule.’

Gary Wang, co-founder and CTO of FTX; Caroline Ellison, CEO of Alameda; and Nishad Singh, FTX head of engineering, all pleaded guilty to charges a month after the crypto exchange and sister company’s downfall in November 2022.

In recent weeks, all three parties took the stand to testify against Sam Bankman-Fried at his trial in the Southern District of New York courthouse. Wang, Ellison and Singh are facing up to 50, 110 and 75 years in prison, respectively.

When Wang testified, prosecutors asked at the end of their examination how many years he was hoping to be sentenced. “Ideally hoping for no time,” he replied, which prompted some quiet laughter in the courtroom.

But that comment by Wang wasn’t a joke and could be a possibility, according to Josh Naftalis, a former federal prosecutor and ex-assistant U.S. attorney for the SDNY, on TechCrunch’s Chain Reaction podcast.

All three agreed to testify as a part of their cooperation agreements with the U.S. government in exchange for more-lenient sentences.

Assuming Bankman-Fried will be convicted and sentenced in roughly three months or more, the pleading witnesses might be lucky. “In a white-collar case, where you’re a first-time offender, as a cooperator, it’s pretty typical for the cooperating witness not to do actual jail time,” Naftalis, now a partner at law firm Pallas Partners, said. 

Of course, that’s not guaranteed, and the potential timeline for that is months away. Naftalis said he’s seen cooperating witnesses who did get jail time in past cases he’s worked on, “but it’s the exception not the rule.”

In front of jurors, the prosecutors emphasized in their examination of these three witnesses their testimonies were an “obligation” to “answer truthfully.” In return, they’d write a 5K letter to the judge describing the crimes and cooperation.

“It’s common sense, right? If the options are you could get a real break if anything, if you tell the truth, if you lie you could face 100 whatever years in jail, you’re going to most likely tell the truth,” Natfalis said.

The timeline for potential sentencing will be slower for the three witnesses, but “it looks like they’ve held up their end of the bargain,” Natfalis said.

This story was inspired by an episode of TechCrunch’s podcast Chain Reaction. Subscribe to Chain Reaction on Apple Podcasts, Spotify or your favorite pod platform to hear more stories and tips from the entrepreneurs building today’s most innovative companies.

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