Yesterday at 7:33 p.m. Eastern, Sam Bankman-Fried, founder of the bankrupt crypto exchange FTX, was guilty of seven counts of fraud and conspiracy. The crypto industry has expired.
The verdict was a “huge relief,” said market analyst Noelle Acheson, formerly of crypto brokerage Genesis. The fraud at FTX, which made the crypto world go round last November, “unfairly tainted” the rest of the sector, she says, in the eyes of regulators and traditional investors. But Bankman-Fried’s conviction will go a long way toward “closing the book” on this unflattering episode, she said.
Although the conviction will have little impact on the amount of funds recovered in FTX’s bankruptcy process, the mood following the verdict is also celebratory among those whose money was embezzled by Bankman-Fried . “I’m thrilled,” says former FTX customer Pat Rabbitte. “The American justice system worked.”
The judge who presided over the case, Lewis Kaplan, will sentence Bankman-Fried at a hearing on March 28. A sufficiently long prison sentence, Rabbitte says, “might help the next future SBF think twice.” On Telegram, where former FTX clients gather to discuss the progress of the bankruptcy proceedings, others struck a similar tone. “Party time! Throw away the keys,” wrote one Telegram user, Krystal B, after the verdict was announced. “Now lock him up for at least 30 years,” wrote another, Jia Yi .
The sins of Bankman-Fried and FTX, says Patrick Hillmann, former chief strategy officer at Binance, the world’s largest cryptocurrency exchange (itself struggling with civil charges in the United States), had been used as a “club” to beat other players in the sector. But it was “basic fraud,” says Hillmann: whether Bankman-Fried conducted a “cryptocurrency exchange or a Pokémon card exchange,” the wrongdoing should be treated the same, says he.
In a statement In response to the verdict, Damian Williams, U.S. Attorney for the Southern District of New York, appeared to confirm what crypto stalwarts were saying: A crypto figure may have been put on trial, but it was a case of fraud old. “Sam Bankman-Fried perpetrated one of the greatest financial frauds in American history: a multibillion-dollar scheme intended to make him the king of crypto,” Williams said. “But even though the cryptocurrency industry is new and actors like Sam Bankman-Fried are new, this type of corruption is as old as time. This case has always been about lying, cheating and stealing, and we have no patience for that.
The length of deliberations at the end of a trial varies considerably from case to case, ranging from a few hours to several days. Here, it took the jury less than five hours to find Bankman-Fried guilty on all counts. The prosecution had convinced the jury that Bankman-Fried had, according to the charge filed against him last December, organized and oversaw a multibillion-dollar fraud.
While Bankman-Fried’s conviction will be seen by most in crypto as “justice served,” Hillmann says, an unqualified celebration is premature because the conditions that allowed the FTX founder to emerge as the last miracle remain unchanged. Within three years, Bankman-Fried managed to steer a fraudulent business into a Valuation of $32 billion. He courted regulators, The politiciansAnd venture capitalist. He fraternized with sports stars and models. He disarmed the journalists with his T-shirt, his shorts and his dad sneakers. He is the “next Warren Buffet“, they crooned, the “Crypto’s Michael Jordan.”
As long as entrepreneurs like Bankman-Fried and the founder of Theranos Elizabeth Holmes and the Ponzi fraudster Bernie Madoff before him – are able to “grab themselves early access to the kind of esteem in which they were held by some of the most powerful entities in the country,” Hillmann says, there remains reason to worry. The people who were supposed to be monitoring the warning signs at FTX were, he said, “at best sleeping at the wheel and at worst ramping up their activities.” In all likelihood, he said, “there will be another Sam Bankman-Fried.”