Sam Bankman-Fried, the Most High-Cost Stockbrokers in the World, was Not Just a Fool’s Advocate

Bankman- Fried was a token of the digital currency, which makes his conviction symbolic. The DoJ, she says, has sent “a message to the crypto industry that fraud and wheeling-and-dealing is not to be tolerated.” The CEO of the biggest exchange in the world, Changpeng Zhao, is being investigated.

As a boy coming of age in the most rarefied quarters of the achievement class, he grew up in a family that viewed the celebration of birthdays and holidays as an inefficiency easily forgone. From such a childhood emerged an adult who worked 22 hours a day and submitted the prospect of any interaction with another person to a cost-benefit calculation that frequently left him canceling meetings and other obligations at the last minute, because, as Michael Lewis writes in “Going Infinite,” his book about Mr. Bankman-Fried’s rise and fall, “he had done some math in his head that proved that you weren’t worth the time.”

Jordan Estes, a former US prosecutor and partner at law firm Kramer Levin says that the testimony of Ellison, CEO of Alameda Research and Bankman-Frieds former girlfriend, stood out. Bankman-Fried was painted as reckless, aggressive and calculating by Ellison, who described for the jury his various deceptions, the careful selection of his public image, and his miscalibrated moral compass. Ellison cried on the stand as she described her fear and guilt over the theft, and the sense of relief she experienced when FTX started to fall.

The judge who presided over the case, Lewis Kaplan, will sentence Bankman-Fried in a hearing on March 28. A suitably lengthy prison sentence, says Rabbitte, “may help the next would-be SBF think twice.” On Telegram, where former FTX customers gather to discuss the progress of the bankruptcy proceeding, others struck a similar tone. “Party time! After the verdict had been announced, one Telegram user wrote, ” Throw away the keys.” “Now lock him up for at least 30 years,” wrote another, Jia Yi.

“Over the past year, our industry took a reputational hit in Washington, but Sam Bankman-Fried’s crimes had nothing to do with the technology underpinning digital assets,” Kristin Smith, the CEO of the Blockchain Association, tells The Verge. “The trial was about a crook — not crypto. And while the trial hasn’t been a net positive for the industry, it has refocused minds on the fundamental promise of decentralization.”

Though the conviction will have little bearing on the quantity of funds recovered in the FTX bankruptcy process, the mood following the verdict is equally celebratory among those whose money was misappropriated by Bankman-Fried. “I’m delighted,” says Pat Rabbitte, previously a customer of FTX. “The US justice system has worked.”

The length of deliberation at the end of a trial varies drastically from case to case, taking hours to days. Here, it took the jury fewer than five hours to find Bankman-Fried guilty on all counts. The jury was convinced by the prosecution that Bankman-Fried architected and oversaw a billion-dollar fraud.

Sam Bankman-Fried, Theranos, and the New Beginning of Cryptobusiness: A Commentary on the Inspects of the SEC

As long as entrepreneurs like Bankman-Fried—and Theranos founder Elizabeth Holmes and Ponzi fraudster Bernie Madoff before him—are able to “buy a fast pass into the kind of esteem in which they were held by some of the most powerful entities in the country,” says Hillmann, there remains cause for concern. He said that the people who were supposed to be watching for warning signs were either sleeping at the wheel or empowering its activities. In all likelihood, he says, “there will be another Sam Bankman-Fried.”

Other companies believe that picking out one bad apple will benefit the rest of the industry. In a statement provided to CoinDesk, Paul Brody, the head of blockchain at financial consulting firm EY, calls the outcome of Bankman-Fried’s trial a “wonderful moment for crypto,” and Yat Siu, the chairman of blockchain gaming company Animoca Brands, says it marks a “new beginning” for the industry.

But much of this appears to have been possible because there was so little meaningful oversight of the crypto industry and so much acceptance of companies playing fast and loose. There are still many questions as to whether the companies left are free from FTX’s flaws or how much they have looked over their partners. And then there’s the simple, inconvenient fact that so many of them are under legal scrutiny.

There’s also the crypto influencer Richard Heart, who the SEC accused of spending at least $12 million in customer funds to purchase sports cars, luxury watches, and a 555-carat black diamond. The SEC has lawsuits filed against other major firms.