What does Sam Bankman-Fried’s ruling mean for cryptocurrencies? | Explained

The story so distant: Sam Bankman-Fried, the former CEO of the collapse cryptocurrency trade FTX, he was sentenced to 25 years in prison on March 28, after being found guilty of multiple fraud charges in 2023 following the spectacular collapse of his cryptocurrency exchange and business.

Nearly a year and a half after the collapse, what does the ruling mean for the cryptocurrency industry and its investors?

(For the day’s top tech news, subscribe to our tech newsletter Today’s Cache)

Read also: Former cryptocurrency tycoon Sam Bankman-Fried convicted of defrauding FTX clients

What are the complete terms of the sentence?

While Bankman-Fried’s lawyers tried to push for a prison sentence shorter than a few years, prosecutors wanted to see him in prison for 40 to 50 years. Meanwhile, the maximum possible sentence was 110 years.

Over the course of a month-long trial in 2023, Bankman-Fried’s legal team sought to move away from the image of him as a malicious scammer who stole cryptocurrency investors’ money, and instead he painted a portrait of a well-intentioned businessman who had been let down by his trusted associates. Attorney Mark Mukasey called Bankman-Fried a “goofy math nerd,” talked about his autism and pushed for a shorter sentence so his client could start a family.

When he was sentenced to 25 years in prison and three years of supervised release, Bankman-Fried admitted that FTX’s clients had suffered and that such recognition was “missing” from what he spoke about during the trial. He also expressed regret for the way he treated his former colleagues.

Bankman-Fried, a former billionaire, will also have to forfeit about $11 billion as part of the sentence. During the legal proceedings, it was determined that customers lost at least $8 billion, although this figure may vary due to the volatile nature of cryptocurrency prices.

The judge authorized the government to use funds recovered through the forfeiture process to compensate victims, according to U.S. Justice Department guidance released Thursday.

Bankman-Fried’s attorney plans to appeal.

What were the charges against Sam Bankman-Fried?

Two counts of conspiracy to commit wire fraud: Condemned

Two counts of wire fraud: Condemned

One charge of conspiracy to commit money laundering: Condemned

Conspiracy to commit commodity fraud: Condemned

Criminal conspiracy to commit securities fraud: Condemned

In total, there were seven cases of fraud and/or related charges.

FTX collapsed in late 2022 as customers, panicking over the health of the exchange, tried to quickly withdraw billions of dollars, triggering a liquidity crisis. It was later determined that Bankman-Fried misused client funds to support Alameda Research, a cryptocurrency trading firm. Bankman-Fried was arrested in the Bahamas a month later and brought back to the United States to face trial.

In a statement Thursday, U.S. Attorney for the Southern District of New York Damian Williams used the ruling to issue a warning that focused on Bankman-Fried as a financial criminal rather than a cryptocurrency fraudster.

“Samuel Bankman-Fried orchestrated one of the largest financial frauds in history, stealing more than $8 billion of his clients’ money,” Williams said. “His deliberate and ongoing lies demonstrated a blatant disregard for client expectations and a lack of respect for the rule of law, all so he could secretly use his clients’ money to expand his own power and influence . The extent of his crimes is measured not only by the amount of money stolen, but by the extraordinary damage caused to the victims, who in some cases have seen their life savings wiped out overnight.”

Read also: The reasons behind the collapse of the cryptocurrency market

According to the judge, the co-founder and former CEO of FTX has been in custody since last year because he violated bail conditions and engaged in witness tampering.

Will FTX users get their money back?

There’s no way to be sure, but such an outcome seems highly unlikely, with different parties making very different claims about the state of FTX’s assets.

Lawyer Andrew Dietderich, who is working with the collapsed cryptocurrency exchange, said earlier this year that a strategy was in place to try to pay off all those customers and creditors with “legitimate claims,” ​​the newspaper reported. CNBC.

Bankman-Fried had also previously said that people would be repaid.

However, Judge Lewis A. Kaplan expressed doubt during sentencing, noting, “The defendant’s claim that FTX’s customers and creditors will be paid in full is misleading, it is logically flawed, it is speculative.”

How will the ruling affect the cryptocurrency market?

Bankman-Fried’s high-profile arrest, his disgraced return to the United States, and… dramatic court proceedings in which his former colleagues and even a romantic partner testified against him, made headlines around the world. His chaotic testimony and uncooperative behavior stunned even the judge and did nothing to turn public opinion in his favor.

The cryptocurrency market itself appeared largely unaffected by news of the ruling, as leading coins Bitcoin (BTC) and Ether (ETH) have not seen dramatic rises or falls in recent days. While the FTX token is still trading, it fell more than 13% on Friday and was worth less than $2, compared to its all-time high of $85.02.

“FTX’s bankruptcy proceedings are ongoing. The FTT token no longer has any use and can be liquidated from assets to pay creditors. Please proceed with caution,” reads a notice on the CoinMarketCap page.

Bitcoin marked a new all-time high this year and surpassed the $70,000 mark, instilling optimism in the sector after about two years of low prices and reputational crisis.

FTX was founded in 2019, and former CEO Sam Bankman-Fried was known for his casual dress sense, lavish lifestyle and a controversial approach to charity known as “effective altruism.” Bankman-Fried was also a prolific political donor in the United States who gave millions of dollars to individuals of both parties, while FTX was known for its high-profile advertising gimmicks, including commercials featuring comedian Larry David and the American football athlete Tom Brady.

The 25-year prison sentence serves to remind crypto entrepreneurs around the world that US regulators can strike quickly when it comes to the fintech sector.

The biggest loss, however, is usually borne by risk-taking investors.

• While Bankman-Fried’s lawyers tried to push for a prison sentence shorter than a few years, prosecutors wanted to see him in prison for 40 to 50 years.

• Bankman-Fried, a former billionaire, will also have to forfeit about $11 billion as part of the sentence.

• Bankman-Fried’s high-profile arrest, his disgraced return to the United States and the dramatic court proceedings in which his former colleagues and even a romantic partner testified against him, made headlines around the world.

This is a Premium item available exclusively to our subscribers. To read over 250 such premium articles every month You have exhausted your limit of free articles. Please support quality journalism. You have exhausted your limit of free items. Please support quality journalism. X You have read {{data.cm.views}} on {{data.cm.maxViews}} free articles. X This is your last free article.

Fuente