Yesterday at 7:33 pm Eastern Time, Sam Bankman-Fried, the founder of the financially troubled cryptocurrency exchange FTX, was found guilty of seven counts related to fraud and conspiracy. This development was met with a collective sigh of relief within the cryptocurrency industry.
The verdict brought a significant sense of relief, according to Noelle Acheson, a market analyst who was previously associated with the crypto brokerage Genesis. She argued that the fraud at FTX, which had sent shockwaves through the crypto world the previous November, had unfairly cast a shadow over the entire industry in the eyes of both regulators and mainstream investors. However, Bankman-Fried’s conviction is seen as a step towards closing the chapter on this unfavorable episode.
Although the conviction is unlikely to impact the amount of funds recovered in the FTX bankruptcy proceedings, those who had their funds mishandled by Bankman-Fried are also celebrating the verdict. Pat Rabbitte, a former FTX customer, expressed his delight, stating that the U.S. justice system had effectively worked.
The sentencing of Bankman-Fried is scheduled for March 28, presided over by Judge Lewis Kaplan. According to Rabbitte, a suitably lengthy prison sentence for Bankman-Fried may serve as a deterrent for future individuals considering similar actions. On Telegram, where former FTX customers gather to discuss the progress of the bankruptcy proceedings, there was a similar tone of celebration, with some users suggesting that it’s “party time” and that Bankman-Fried should be incarcerated for at least 30 years.
Patrick Hillmann, the former Chief Strategy Officer at Binance, the world’s largest crypto exchange, which is also facing legal challenges in the U.S., pointed out that the wrongdoings of Bankman-Fried and FTX had been used as a weapon to criticize others in the industry. He emphasized that this was a case of straightforward fraud, regardless of whether Bankman-Fried was running a cryptocurrency exchange or a Pokémon card exchange.
In response to the verdict, Damian Williams, the U.S. attorney for the Southern District of New York, seemed to support the viewpoint of the crypto community. He characterized this case as a classic example of financial fraud, asserting that Sam Bankman-Fried had perpetrated one of the most significant financial frauds in American history, designed to establish him as the “King of Crypto.”
The rapidity of the jury’s decision was notable, taking less than five hours to find Bankman-Fried guilty on all charges. The prosecution successfully convinced the jury that Bankman-Fried had masterminded and overseen a multibillion-dollar fraud, as alleged in the indictment filed against him in December.
While many in the cryptocurrency industry view Bankman-Fried’s conviction as a form of justice, Patrick Hillmann cautioned against unbridled celebration. He pointed out that the conditions that allowed Bankman-Fried to rise to prominence despite his fraudulent activities remain largely unchanged. In a span of just three years, Bankman-Fried managed to lead a fraudulent enterprise to a valuation of $32 billion, gaining favor with regulators, politicians, and venture capitalists. As long as individuals like Bankman-Fried can swiftly gain influence and prestige, there is still reason for concern, according to Hillmann. He suggested that the oversight mechanisms in place were either lax or complicit in FTX’s activities, and there may be another individual like Sam Bankman-Fried in the future.