Opinion
Sam Bankman-Fried was hailed as a prodigy of the crypto scene – until his crypto exchange imploded. He has now been found guilty in a fraud trial. Investors are at a disadvantage.
Until the end, Sam Bankman-Fried felt like he had the situation under control. To be able to talk your way out of it. In the weeks and months after the crashing end of his crypto exchange FTX, he spoke out almost daily to journalists, at events and on Twitter – against the advice of his lawyers. Why not? At the age of 29, he was already one of the richest people on the planet. Everything he had touched up to that point seemed to turn gold.
He should therefore be surprised by the verdict – although it actually doesn’t come as a particularly big surprise. This shows the speed of the decision. After around four and a half hours, the jury returned on Friday night: guilty on all charges. The fallen Crypto King sat down and stared at his empty table. He had previously pleaded not guilty to two counts of fraud and five counts of conspiracy.
The sentence is expected to be announced in March, and it could be up to 20 years in prison for each charge – a total of 110 years behind bars. Bankman-Fried will most likely never be a free man again.
Embezzlement of $8.7 billion
His story shows once again what crypto founders with a lot of persuasion are capable of. Investors believed their money was safe on what was then the third-largest crypto exchange in the world, and the founder was ultimately highly praised and even made it onto the cover of Forbes. But in the background he cheated his customers out of a lot of money, embezzling around $8.7 billion out of pure greed. He is accused of using client money to cover debts at his hedge fund Alameda Research. In addition, according to the indictment, he did not properly separate company and customer funds.
More than 60 prominent financiers, including Softbank, Ribbit, Sequoia and Coinbase, invested more than $1.9 billion in FTX. The company grew and grew and worked intensively on its brand awareness. Bankman-Fried bought the naming rights to the Miami Heat stadium for 19 years – and the star of the US football league, Tom Brady, was named “Ambassador”.
While the founder continued to appear modest, trustworthy and good-natured in public, his true face was revealed in the dock: he was arrogant and self-absorbed. The facts were clearly against him and he continued to stubbornly and falsely assert that the money was safe. He just wouldn’t stop making excuses.
Just a year and a half ago, Bankman-Fried sought trust at Capital and OMR’s Finance Forward conference. “We treat customer funds as the most important assets on FTX – these are the ones we will pay back under all circumstances,” he told the audience in Hamburg at the time. Given the developments since then, that sounds like sheer mockery today.
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Despite the guilty verdict, the customers will have to continue to bear the damage. Will they ever see their money again? Unlikely.
The scandal has left its mark on the crypto world. Since then, regulatory and law enforcement authorities worldwide have wanted to be tough. The impact of the sudden disappearance of such a big player has also hit other major crypto companies. But have crypto investors really learned from the false trust in Sam Bankman-Fried? That is doubtful.
This article first appeared at .
Source: Stern
