In an outcome that won’t surprise observers, Sam Bankman-Fried, the Founder and former CEO of collapsed crypto exchange FTX, has been found guilty of all seven charges for which he was on trial and now faces up to a maximum of 110 years in prison.
Those charges include wire fraud, conspiracy to commit fraud, and conspiracy to commit money laundering. Bankman-Fried will be sentenced on March 28 next year, although he faces a second trial on March 11 for five other charges.
Trial over, there is now a sense, considering the outcome and how it reflects on the entire crypto industry, that a door has been closed on a turbulent and sometimes strange period. To grasp just how unprecedented these past few years have been, it’s worth considering the context and surrounding events that led to Bankman-Fried’s downfall.
BREAKING: A jury has found Sam Bankman-Fried guilty of all 7 criminal counts against him. @Kr00ney reports. https://t.co/NML57SVCdL pic.twitter.com/PccrhR0Eac
— CNBC (@CNBC) November 2, 2023
2020 to 2021: A Crypto Carnival
Bankman-Fried launched FTX in 2019, and the exchange peaked in mid-2021. By then, it had become the third-largest crypto exchange in the world. It had over a million users, while its upper executives were, as is now widely documented, living in otherworldly opulence, and eccentricity, in the Bahamas.
Part of the reason this rapid growth was possible was that as FTX launched, crypto itself was heading towards a manically bullish period, having recovered from the crash of 2018, which happened after the hugely euphoric run-up in prices at the end of 2017.
As unprecedented pandemic measures went into force in 2020, entire populations worldwide found themselves at home, always online, and often with stimulus payments incoming from the government. This occurred in sync with 2020’s Bitcoin halving–a four-year event widely believed to move the BTC price upwards–and suddenly there was a perfect recipe for a surging crypto bull market, with FTX and other platforms reaping substantial returns.
Worldwide Google searches for “bitcoin” surged in 2021.
What’s more, there was a public desire for a respectable exchange that retail investors, often inexperienced with crypto, could place their trust in. Bankman-fried stepped up to ensure that FTX played that role, putting in place celebrity endorsements, acquiring naming rights at what would briefly become the FTX Arena, and running a Super Bowl halftime commercial.
And as for Bankman-Fried himself, he projected the role of disarmingly casual tech altruist: safely nerdish but visionary, or depicted as a genius who simply wanted to make society better, and make FTX’s users wealthier in the process. His hair was messy, he wore shorts, he claimed to drive a Toyota Corolla despite his riches, and he even advocated a supposedly world-changing brand of practical philosophy called Effective Altruism.
And as is also now widely known, he donated a lot of the money he had access to through FTX to politicians on both sides of the American aisle, lending him influence and, again, respectability, but at the political level.
SBF, Sam Bankman-Fried has been found guilty.
However around 40% of CONGRESS(!!!) received donations from SBF and FTX that were mixed user funds!
Only a few politicians returned or donated the funds.
Here is the full list of everyone who has received funds from FTX and Sam. pic.twitter.com/2KWysjLEdP
— unusual_whales (@unusual_whales) November 3, 2023
The Crashes and Crises of 2022
In 2022, the exuberance around crypto–that had rocketed Bitcoin and other protocols to new all-time highs by late 2021–rapidly gave way to an industry-wide collapse, partly as a result of rising interest rates, but fueled in a destructive feedback loop by the failure of Terra/Luna, and the collapses of crypto hedge fund Three Arrows Capital and lending protocol Celsius, before, most shatteringly, FTX filed for bankruptcy that November.
Press Release pic.twitter.com/rgxq3QSBqm
— FTX (@FTX_Official) November 11, 2022
Remarkably, these shocks to the crypto system have resulted in four highly prominent individuals being arrested: not only Bankman-Fried, but also Alex Mashinsky of Celsius (on various counts of fraud and conspiracy), Do Kwon (co-founder of Terra/Luna creator Terraform Labs, now jailed in Montenegro for document forgery), and Su Zhu of Three Arrows Capital (for failing to cooperate with bankruptcy proceedings in Singapore.)
The End of an Era in Crypto?
The end of the SBF trial looks as though it may also mark the end of an era in crypto, indicating that the industry can never now return to its wildest pioneer phase, or the attendant eccentricities and risks. That the jury verdict coincides with functioning regulatory frameworks being worked out worldwide, and even beginning to be put in place, only emphasizes the shift taking place.
Moreover, Bankman-Fried’s sentencing date, next March, looks like it might roughly coincide with the arrival of spot BTC ETFs, should they be approved. While we shouldn’t look for symbolism too much, one can’t help but detect that these changes in the landscape are happening all around the same time.
JUST IN: 🇺🇸 US Attorney says Sam Bankman-Fried perpetrated one of the biggest financial crimes in US history. pic.twitter.com/CLzVhiALUg
— Watcher.Guru (@WatcherGuru) November 3, 2023
Crypto has been dominated in public, throughout its short history, by a series of flamboyant characters who sometimes push eccentricity to the extremes, or–in Bankman-Fried’s case–into the realms of serious criminality. While we shouldn’t expect such participants to disappear entirely, on a stage to which sober corporate entities such as BlackRock are now entering, there will likely be fewer opportunities for another Bankman-Fried-like character to wrest temporary control of the story.
If the institutions are coming, then the game will change, and if you were on the front lines of crypto between 2019 and 2023, you got a close-up view of a clattering, one-of-a-kind spectacle that was truly of its moment.
The verdict may come to mark a change in crypto, as the industry shifts into greater maturity.
In an outcome that won’t surprise observers, Sam Bankman-Fried, the Founder and former CEO of collapsed crypto exchange FTX, has been found guilty of all seven charges for which he was on trial and now faces up to a maximum of 110 years in prison.
Those charges include wire fraud, conspiracy to commit fraud, and conspiracy to commit money laundering. Bankman-Fried will be sentenced on March 28 next year, although he faces a second trial on March 11 for five other charges.
Trial over, there is now a sense, considering the outcome and how it reflects on the entire crypto industry, that a door has been closed on a turbulent and sometimes strange period. To grasp just how unprecedented these past few years have been, it’s worth considering the context and surrounding events that led to Bankman-Fried’s downfall.
BREAKING: A jury has found Sam Bankman-Fried guilty of all 7 criminal counts against him. @Kr00ney reports. https://t.co/NML57SVCdL pic.twitter.com/PccrhR0Eac
— CNBC (@CNBC) November 2, 2023
2020 to 2021: A Crypto Carnival
Bankman-Fried launched FTX in 2019, and the exchange peaked in mid-2021. By then, it had become the third-largest crypto exchange in the world. It had over a million users, while its upper executives were, as is now widely documented, living in otherworldly opulence, and eccentricity, in the Bahamas.
Part of the reason this rapid growth was possible was that as FTX launched, crypto itself was heading towards a manically bullish period, having recovered from the crash of 2018, which happened after the hugely euphoric run-up in prices at the end of 2017.
As unprecedented pandemic measures went into force in 2020, entire populations worldwide found themselves at home, always online, and often with stimulus payments incoming from the government. This occurred in sync with 2020’s Bitcoin halving–a four-year event widely believed to move the BTC price upwards–and suddenly there was a perfect recipe for a surging crypto bull market, with FTX and other platforms reaping substantial returns.
Worldwide Google searches for “bitcoin” surged in 2021.
What’s more, there was a public desire for a respectable exchange that retail investors, often inexperienced with crypto, could place their trust in. Bankman-fried stepped up to ensure that FTX played that role, putting in place celebrity endorsements, acquiring naming rights at what would briefly become the FTX Arena, and running a Super Bowl halftime commercial.
And as for Bankman-Fried himself, he projected the role of disarmingly casual tech altruist: safely nerdish but visionary, or depicted as a genius who simply wanted to make society better, and make FTX’s users wealthier in the process. His hair was messy, he wore shorts, he claimed to drive a Toyota Corolla despite his riches, and he even advocated a supposedly world-changing brand of practical philosophy called Effective Altruism.
And as is also now widely known, he donated a lot of the money he had access to through FTX to politicians on both sides of the American aisle, lending him influence and, again, respectability, but at the political level.
SBF, Sam Bankman-Fried has been found guilty.
However around 40% of CONGRESS(!!!) received donations from SBF and FTX that were mixed user funds!
Only a few politicians returned or donated the funds.
Here is the full list of everyone who has received funds from FTX and Sam. pic.twitter.com/2KWysjLEdP
— unusual_whales (@unusual_whales) November 3, 2023
The Crashes and Crises of 2022
In 2022, the exuberance around crypto–that had rocketed Bitcoin and other protocols to new all-time highs by late 2021–rapidly gave way to an industry-wide collapse, partly as a result of rising interest rates, but fueled in a destructive feedback loop by the failure of Terra/Luna, and the collapses of crypto hedge fund Three Arrows Capital and lending protocol Celsius, before, most shatteringly, FTX filed for bankruptcy that November.
Press Release pic.twitter.com/rgxq3QSBqm
— FTX (@FTX_Official) November 11, 2022
Remarkably, these shocks to the crypto system have resulted in four highly prominent individuals being arrested: not only Bankman-Fried, but also Alex Mashinsky of Celsius (on various counts of fraud and conspiracy), Do Kwon (co-founder of Terra/Luna creator Terraform Labs, now jailed in Montenegro for document forgery), and Su Zhu of Three Arrows Capital (for failing to cooperate with bankruptcy proceedings in Singapore.)
The End of an Era in Crypto?
The end of the SBF trial looks as though it may also mark the end of an era in crypto, indicating that the industry can never now return to its wildest pioneer phase, or the attendant eccentricities and risks. That the jury verdict coincides with functioning regulatory frameworks being worked out worldwide, and even beginning to be put in place, only emphasizes the shift taking place.
Moreover, Bankman-Fried’s sentencing date, next March, looks like it might roughly coincide with the arrival of spot BTC ETFs, should they be approved. While we shouldn’t look for symbolism too much, one can’t help but detect that these changes in the landscape are happening all around the same time.
JUST IN: 🇺🇸 US Attorney says Sam Bankman-Fried perpetrated one of the biggest financial crimes in US history. pic.twitter.com/CLzVhiALUg
— Watcher.Guru (@WatcherGuru) November 3, 2023
Crypto has been dominated in public, throughout its short history, by a series of flamboyant characters who sometimes push eccentricity to the extremes, or–in Bankman-Fried’s case–into the realms of serious criminality. While we shouldn’t expect such participants to disappear entirely, on a stage to which sober corporate entities such as BlackRock are now entering, there will likely be fewer opportunities for another Bankman-Fried-like character to wrest temporary control of the story.
If the institutions are coming, then the game will change, and if you were on the front lines of crypto between 2019 and 2023, you got a close-up view of a clattering, one-of-a-kind spectacle that was truly of its moment.
The verdict may come to mark a change in crypto, as the industry shifts into greater maturity.
