- Sam Bankman-Fried was found guilty of all seven charges against him.
- He displayed a characteristic lack of self-awareness while testifying.
- Crypto’s future likely lies in regulation and institutions, spelling the end of its Wild West era.
A New York jury took less than five hours on Thursday to find Sam Bankman-Fried guilty of all seven charges the FTX founder faced.
The month-long trial saw Bankman-Fried testify in his own defense, with characteristically meandering or evasive responses to cross-examination that saw the judge tell him: “Look, just answer the questions.”
At one point, the judge sustained an objection from Bankman-Fried’s attorney, but the former billionaire answered the prosecutor’s question anyway. It prompted laughter from the courtroom as he said “I felt the need to answer that one,” Insider reported.
Across his four days on the stand, it seemed as though Bankman-Fried did a better job of displaying his arrogance rather than his innocence.
As Renato Mariotti, a former prosecutor in the Justice Department’s securities and commodities fraud section, puts it: “He has finally met a situation that he can’t talk his way out of.”
Now facing up to 110 years in prison, SBF’s conviction marks the final nail in the coffin for the coterie of crypto bros who got rich quick.
What began as a decentralized currency became an asset for speculative investors due to its volatility, and is now plastered with distrust and suspicion.
But that’s not to say the sector is dead.
The price of Bitcoin has risen by 24% in the last month, and has only dipped around 2% since Bankman-Fried was found guilty, per Markets Insider data.
It rallied around mid-October on false reports that the asset manager BlackRock had received regulatory approval for a Bitcoin exchange-traded fund.
Its price dropped again after BlackRock said it’s actually still under review. But the episode shows how crypto is becoming more institutionalized, while its age of speculation comes to an end.
Consider also the advent of central bank digital currencies, or CBDCs. These aren’t cryptocurrencies, but support for them arose from the popularity of blockchain technology. And everyone from Japan to the UK to the Fed is exploring their use.
Yet regulating crypto now faces more obstacles since Bankman-Fried was a major player in promoting legislation.
SBF spent millions chartering private jets to Washington, DC, and prosecutors said he donated $100 million to “weed out anti-crypto” politicians and gain favorable influence.
Evidence in his trial included DMs he sent to a Vox reporter, with lines like “fuck regulators.” Bankman-Fried also testified he believed regulation would help give FTX a competitive edge over rival crypto exchange Binance.
Binance is facing its own legal troubles too.
The Securities and Exchange Commission filed a lawsuit against Binance in June, accusing it of a “blatant disregard” for securities laws.
That complaint includes one especially damning exchange, in which the SEC alleges Binance’s chief compliance officer said:
“we are operating as a fking unlicensed securities exchange in the USA bro.”
There’s also the case of Do Kwon, the founder of the TerraUSD stablecoin who is accused by the SEC of running a fraud scheme that ultimately led to $40 billion being knocked off the total value of TerraUSD and sister currency Luna.
And let’s not forget the countless scams, such as the group that hijacked Twitter accounts like Elon Musk’s and Joe Biden’s, before falsely claiming they would double all Bitcoin sent to them.
With Sam Bankman-Fried’s conviction, fraud may become synonymous with crypto for many people. The way forward is likely to involve more regulation and more institutions that people can trust.
In the court’s overflow room where spectators watched his trial on a livestream, there was jeering, cheering, side bets and vaping, as New York Magazine reported.
That may well be the final party before the crypto industry eschews its cargo shorts and T-shirts for good.
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