Bankman-Fried’s conviction stirs both hope and condemnation for crypto
Sam Bankman-Fried’s conviction for a huge fraud at the FTX exchange raises a deceptively simple question: what next for crypto?
The former billionaire was a vocal champion of the industry but now faces decades in jail, a fall that is emblematic of the boom and bust in the digital-asset market over the past two-and-a-half years.
For some in crypto, his conviction on seven counts of fraud and conspiracy points to the end of an era of risky and wrongful practices, and a more regulated future of wider adoption of digital assets and blockchain technology.
Others outside the industry are taking a much tougher line, arguing that the verdict confirms crypto as a sector riven with weaknesses that attract criminals, hackers and rogue states.
Crypto markets dipped after the verdict but the losses were mostly contained. Bitcoin — up more than 100% this year following a $1.5-trillion digital-asset rout in 2022 — fell about 1% to $34,660 as of 10:46am in Singapore on Friday.
Reactions to the jury verdict follow below.
“The guilty charges in the FTX case mark the end of an era,” said Brian Mosoff, chief executive officer of Ether Capital, which invests in crypto and blockchain projects. “The days of wild west exchanges, scammy assets, fraud, and an industry living off in the corner of the Internet are over.”
“Success, fame, and money were the early-in-the-story words to describe Sam’s empire, but the final will be deception, fraud and justice,” Mosoff said.
Time to move on
“We have to learn and move on,” said Paul Veradittakit, managing partner at venture capital company Pantera Capital, adding “regulatory clarity is needed and helpful to prevent these situations”.
“Diligence in crypto continues to evolve in the space and I’m sure it has evolved with this current market,” Veradittakit added.
“It’s a watershed moment that reinforces again that crime does not pay in the digital-asset space and there is enforcement, which should reassure investors and traders that the industry is maturing,” said Angelina Kwan, chief executive officer of regulatory consultancy Stratford Finance. “We will look back at this moment and say this was the first step out of the crypto winter that the demise of FTX contributed to.”
“FTX and Sam Bankman-Fried are not one-offs in the crypto industry,” said Dennis Kelleher, co-founder of Better Markets. “In fact, today’s conviction is a condemnation of the entire crypto industry and its business model which is based on breaking the law for a financial product that has no socially useful purpose.”
“It is just the opposite: crypto’s use and value is in breaking the law, from ripping off customers, money laundering and tax evasion to ransomware, gambling, and funding terrorists and rogue states like Hamas, North Korea, and Iran,” he said.
“This is an important disruption in our financial system,” said Campbell Harvey, a finance professor at Duke University, referring to crypto and blockchain technology. “Part of the process includes learning from the failure. There are painful lessons. However, the system becomes stronger after these failures. We learn, often the hard way, but we learn. We need to always think about the big picture: improving our financial system, which leads to financial democracy and increased economic growth.”