SBF's Fraud Scheme Outside the United States

D. The “Relocating,” “Outside the United States,” or “Sophisticated Means” Enhancement Applies

The defendant objects, based on his own trial testimony, to the recommendation in the PSR that a two-level enhancement applies for locating FTX outside of the United States. (Def. Mem. at 24). There is no merit to this objection.

Pursuant to Section 2B1.1(b)(10)(C) of the Guidelines, a two-level enhancement is warranted if (a) “the defendant relocated, or participated in relocating, a fraudulent scheme to another jurisdiction to evade law enforcement or regulatory officials,” (b) “a substantial part of a fraudulent scheme was committed from outside the United States,” or (c) the offense “involved sophisticated means.” U.S.S.G. § 2B1.1(b)(10). The “relocating” enhancement is appropriate where the defendant “moved his scheme … in an effort to avoid detection.” Warner v. United States, 21 F. App’x 43, 46 (2d Cir. 2001). A two-level increase is appropriate based on each of these bases for the enhancement. The defendant relocated FTX and Alameda outside of the United States in part to take advantage of the more permissive regulatory environment that allowed FTX.com to offer cryptocurrency derivative products that are not lawful to sell as a U.S.-based company offering its products to U.S. retail customers without an appropriate license from the CFTC. (Accord GX-913 (defendant’s testimony before the U.S. House seeking to “work with the Commodity Futures Trading Commission” so that FTX US could offer margined derivative products to U.S. customers)).

In any event, the defendant does not dispute that a substantial part of the fraudulent scheme was committed from outside the United States, and that the offense otherwise involved sophisticated means. Both are plainly true. Therefore, the enhancement pursuant to U.S.S.G. § 2B1.1(b)(10) applies. See U.S.S.G. § 2B1.1 cmt n.9(B) (“Conduct such as hiding assets or transactions, or both, through the use of fictious entities, corporate shells, or offshore financial accounts” can be “sophisticated means,” as can an “especially complex or especially intricate offense”).