The SBF saga saw many people lose their life savings, causing them two years of stress.
Sam Bankman-Fried, the fallen ‘Crypto-King’, as he was once known, was sentenced to 25-years in prison for defrauding customers and investors of his now-bankrupt crypto exchange FTX.
Thursday’s ruling shows how the legal system is trying to clamp down on crypto scams. But while the sentencing serves as a warning to the industry, it is uncertain if it will be a watershed moment that cleans up crypto.
Bankman-Fried was cherished in the industry and went from having his face on the cover of Fortune magazine in September 2022, as head of the world’s biggest crypto exchange, to being sat in a courtroom wearing khaki prison clothes and shackles on his feet two years later.
The sentence was less than the 40 to 50 years federal prosecutors wanted, but it is much more than the five years Bankman-Fried’s lawyers were after.
“This is a message that is loud and clear. They [the Department of Justice] are not going to tolerate nefarious, criminal, white collar criminal behaviour in the cryptocurrency sector and industry,” said Moises Vela, an attorney and former director of the administration of then-Vice President Joe Biden.
But Vela, who is also an advisor to the cryptocurrency Unicoin, said it might not save the industry from bad actors.
“You could argue that it [legal punishment] has never worked because people continue to commit the same crimes.
“But I hope it works. I have to believe that people will see that if you misbehave and you act in an egregious criminal behaviour pattern, you will be punished,” he said.
The crypto market has seen unprecedented growth and has been seen by many as a get-rich-quick scheme.
But the SBF saga saw many people lose their life savings, causing them two years of stress. It may see crypto investors become more wary of the industry.
As digital assets continue to gain traction, regulation is becoming increasingly important. In the United States, the sector is being heavily monitored by the Department of Justice and the Securities and Exchange Commission (SEC), among other federal agencies.
In Europe, the bloc signed the MiCA Regulation, which aims to protect investors and preserve financial stability.
But Vela warned that the crypto industry and governments should work together when it comes to regulation.
“This is a sector that is not going to go anywhere. It is part of our global future. I do think that we will find that middle ground. We rarely get it right the first time,” he said.
“Ultimately, we will reach that middle ground. And yes, we will have a policy and regulatory environment that will be conducive for growth and it will be conducive for investment,” he added.
‘No remorse’
During the trial, Judge Lewis Kaplan said Bankman-Fried did not deliver “a word of remorse for the commission of terrible crimes”.
“There is a risk that this man will be in position to do something very bad in the future … And it’s not a trivial risk at all,” Kaplan added.
Bankman-Fried is appealing the verdict and even said FTX employees had lost out on the chance to build something promising and suggested they should get together to build another project together.
ADVERTISEMENT“I guess there is a big opportunity in the world to do what the world thought I would do, what it hoped I would do, at least for a while, what I hoped I would do for the world, not what I ended up doing,” Bankman-Fried told the courtroom.
“And 300 people that I used to work with, incredibly talented, selfless, impressive people were looking for something to do. If that happens, if they do what they could for the world, then hopefully I’ll be able to see their success, not just my own failures, each night”.
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