The former crypto king was found guilty on all charges by a jury in Manhattan. These crypto experts are optimistic about this. ‘It is positive that limits are being placed on cowboy behavior in this sector.’
After just five hours of deliberation, all twelve jurors found Sam Bankman-Fried guilty on all seven fraud and conspiracy charges on Thursday. We will have to wait until March 28 to determine the penalty. Only then will it become clear how long the founder of the collapsed crypto exchange FTX will have to go to jail.
On the steps of the Manhattan courthouse, US District Attorney Damian Williams declared that Bankman-Fried had committed fraud “to make him the king of crypto.” The crypto industry may be new, he said, “but this kind of corruption is as old as time itself.”
Inside the courtroom, Bankman-Fried had listened to the verdict in the Manhattan courtroom, apparently impassively. Not much later, he announced that he would appeal his conviction. This is only possible after March 28.
What are the consequences of this statement for the crypto world? “Bankman-Fried was just a cold-blooded gambler with other people’s money,” says crypto expert Bert Slagter. ‘That no longer has anything to do with crypto. You encounter these types of figures everywhere in the financial world, but in some circumstances they can do more harm than in others.’
“It is positive that a limit is being put on the cowboy behavior that has been visible in this sector in recent years,” says Bart Mol of Satoshi Radio, a Dutch podcast about crypto. ‘The fact that you as a director can be personally sued means you have more to lose. If Bankman-Fried goes to jail for 25 years, the next one will tech bro think twice before starting a crypto exchange without accounting.’
Nevertheless, much damage has already been done, Mol believes. ‘The image of crypto has not exactly improved in the past two years. The hype is gone, and there is now even a slight aversion to crypto among the average person on the street.’
Slight aversion is good, says Sam Wouters, analyst at River, an investment platform for bitcoin, the largest cryptocurrency in the world. “Most crypto projects have themselves to blame for this with their big promises that they have not kept.”
He himself found the trial against Bankman-Fried uninteresting. ‘How far the fraud went and what punishments were handed out are just details. The only relevant thing for me is to what extent this will be abused to introduce unnecessary regulations that make the daily use of bitcoin more difficult.’
Slagter is pleased that journalists, politicians and supervisors made the distinction between damage due to a lack of rules and damage due to large-scale fraud during the trial against Bankman-Fried. ‘The latter can also take place in a strictly regulated market. Just think of scandals such as Enron, Bernie Madoff, Theranos or Wirecard.’
If this distinction had not been made clear, you would quickly end up with ‘all cryptos are scams’ and ‘we should ban everything with crypto’, he says. He also sees a probably positive aftermath.
Remarkably, it still has to do with rules. Slagter: ‘Friends and foes now agree that there should be stricter rules and strict supervision for companies that offer crypto services. They must act in the interests of the customer and be transparent about their costs and financial situation.’
Europe has already taken ‘a good first step’ in that regard, he believes. From December, the European crypto regulation MiCA will be fully in force. Crypto exchanges will therefore have to do more risk management, for example, and there will also be supervision of funds that invest in cryptos.