In crypto circles, the Bankman-Fried trial was considered a “galactic embarrassment”, a spectacle whose outcome would have little effect on the prospects or trajectory of the remaining crypto companies, but would cast a dark cloud over the industry and attract a torrent of unflattering press.
Its conclusion marks an opportunity for the crypto sector to start fresh. Bankman-Fried and FTX may be the story du jour, says Kurt Wuckert Jr., a Bitcoin expert at media company CoinGeek, but they will soon become artifacts of crypto history, as the closure of the Silk Road underground market Or Mt. Gox Stock Exchange Bankruptcy. FTX will become just another “reference point,” he says.
But that doesn’t prevent another similar fraud from happening in the future, Wuckert Jr. says, especially since it remains a problem. lack of regulatory clarity regarding cryptography in jurisdictions like the United States. Bankman-Fried’s conviction doesn’t mean “crypto is clean,” says Kyla Curley, a forensic crypto investigator and partner at compliance consultancy StoneTurn. Until crypto companies are required to adhere to a clear, industry-specific set of standards, she says, “buyer beware” remains the message.
Perhaps the most immediately tangible benefit of the conviction is its cathartic effect for FTX’s customers, although it will have no impact on the amount of money returned at the end of the bankruptcy process. “It’s more about justice, feelings and emotions,” says Mike van Rossum, founder of trading company Folkvang, a creditor and shareholder of FTX. “We need a world where there is accountability for the bad things you do. In Sam’s case, bad things were done.
Now that the jury has returned its verdict, Judge Lewis Kaplan will decide on an appropriate sentence for Bankman-Fried. The maximum prison term for the seven counts he was convicted of is more than one hundred years. But in practice, Estes says, the sentence will likely be much lower than that figure. Kaplan is expected to make a decision on this in the coming months.
In the meantime, Bankman-Fried must prepare for a second trial. In March 2024, he will stand trial on five additional charges brought by the DoJ in the months following his first arrest, including conspiracy to commit bank fraud, conspiracy to commit bribery and fraud in securities.
The problem for Bankman-Fried, Estes said, was always that he had to defeat each of the 12 charges against him to be released. This was made more difficult when his trial was split in two, leaving him with two sets of jurors to convince. Although the burden of proof was on the U.S. government, Bankman-Fried faced an “uphill battle,” Estes says, because he only needed to be convicted of “one count in one or ‘other trials’ so the judge can ‘sentence him to prison.