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06/11/2023   Sam Bankman-Fried Verdict: The Crypto Industry Reacts

Long-time watchers of the crypto space are mostly positive on what SBF’s conviction means for the future. But long-time critics in Congress are readying to crack down further on the industry.

Prosecutors outside the courthouse where Sam Bankman-Fried was convicted on Nov. 2, 2023. (Nik De/CoinDesk)

Prosecutors outside the courthouse where Sam Bankman-Fried was convicted on Nov. 2, 2023. (Nik De/CoinDesk)

With Sam Bankman-Fried’s conviction yesterday on seven counts of fraud in federal court, the long-running FTX saga appears to be nearing a conclusion (though sentencing and several live issues are yet to be finalized fully).

The question now is what the verdict means for the future of the industry? Will it prove a lasting stain on crypto’s reputation, making it impossible for companies to persuade users of the merits of digital assets? Or will it serve as a moment of closure, proof that the legal system, journalism and the industry itself can clean its ship?

CoinDesk reached out to several long-time crypto watchers for comment and received several quotes unsolicited as well. They follow below (we’ll update with more as we receive them).

Paul Brody, head of blockchain at EY:

“It’s a wonderful moment for crypto. Accountability and the sense that bad actors will be punished is important – not just for deterring bad actors but to give confidence to those who are operating with integrity. If you’re investing in a business, you need to know that the competition will be on a level playing field and that integrity is not something that puts you at a competitive disadvantage.”

Noelle Acheson, former head of research at CoinDesk and writer of the “Crypto Is Macro Now” newsletter:

“The verdict came as a huge relief. While it looked increasingly likely as the trial wore on, there was always the outside chance that SBF would yet again embarrass the industry by showing that crypto fraud can be hard to prosecute. That didn't happen, and the swift and unanimous decision from the jury definitively shows that fraud is fraud, and crypto service providers can and should be held accountable. The closure of the SBF phase should help to show the next wave of investors that crypto markets can be grown up. And hopefully now we can get back to building the capital market infrastructure the ecosystem deserves.”

“This case was always about fraud, and this outcome confirms that the jury understood who and what was on trial here.

“The jury heard evidence that Sam Bankman-Fried was out for himself, and that's reflected in the verdict. This case serves as a reminder that rules that have existed for a long time created a path to accountability for these crimes.

“My hope is that we can turn the focus to the victims here rather than continuing to give airtime to the latest person who committed one of the oldest crimes on the books – fraud.”

U.S. Senator Sherrod Brown (D-OH), chairman of the Senate Committee on Banking, Housing and Urban Affairs:

“This verdict is a victory for everyone fighting fraud and scams in crypto. In this trial, we saw how crypto companies like FTX think the law doesn’t apply to them, gamble with consumers’ money and lie to the public. Americans continue to lose money every day in crypto scams and frauds. We need to crack down on abuses and can’t let the crypto industry write its own rulebook.”

No one is above the law, including crypto executives. Sam Bankman-Fried stole billions from everyday Americans and will be held accountable.

— Elizabeth Warren (@SenWarren)November 3, 2023

Preston Byrne, corporate partner and practices in the Brown Rudnick's Digital Commerce group:

I would not read too much into the SBF trial result as a forward-looking matter. What’s done is done. SBF is off the board as a major player in crypto, probably for the rest of his working life. What this is, is a significant and decisive victory for the US Attorney’s office in the SDNY convincing a jury that fraud is fraud even in a context where complex, novel technology is involved. I would expect that the USAO has a lot more confidence today that they can win other big cases against bad actors in crypto than they did yesterday.

Joshua Klayman, U.S. head of fintech and head of blockchain and digital assets at Linklaters:

“People sometimes talk about divine justice. Yesterday’s verdict may just be sublime justice, with the criminal trial of Sam Bankman-Fried wrapped up in a bow exactly one year to the day after CoinDesk’s award-winning reporting about Alameda Research’s balance sheet revealed the empire to be, arguably, a house of cards. After a month-long trial, where SBF famously took the stand, the Manhattan jury took only a few hours to find him guilty of all seven criminal charges brought against him.

“In terms of winners and losers for the crypto space, it remains to be seen. In my view, the prosecution was successful in convincing the jury that the case came down to things like basic fraud, which transcends any particular industry, and the swift verdict is likely to embolden prosecutors, who may be less willing to enter into plea arrangements and more likely to go to trial.

“I also think that, in a way, this verdict is a win for the crypto industry itself. After all, it was the industry (including crypto journalists) that discovered and exposed SBF’s wrongdoing, and certain market participants that were themselves harmed by FTX and Alameda testified in the case against SBF. SBF being found guilty may be an important milestone or marker that enables the digital asset space and the broader market to move on from the events of 2022, because the bad actor is, in fact, being held accountable.

“To the extent that digital asset market participants continue to emphasize that bad actors and fraud should be held accountable – and to emphasize key strengths of the technology, including transparency, that may help deter or root-out criminal behavior – I think that can lead to wins for the industry. Despite the rapid rise and fall of FTX and Alameda, builders have kept on building. Our space is resilient, and crypto lives on.”

Michael Selig, counsel in the Asset Management Department, Willkie:

"The trial verdict offers some degree of resolution and closure on the events of the past few years and provides an opportunity for a crypto industry reset with lawmakers and regulators. The events of the past few years inflicted immense reputational damage on the industry and caused countless regulatory investigations and Congressional inquiries into market participants and practices, overshadowing many recent technological innovations.

"I have no doubt that the SEC and CFTC will continue to aggressively enforce industry compliance with legacy laws and do not expect Congress to pass new crypto legislation any time soon. Yet both the crypto industry and regulators were caught in the crosshairs of common enemies and this chapter is coming to a close. I am hopeful that industry and regulators can now turn the page and find common ground for a sensible regulatory solution."

Kevin J. O’Brien, Ford O'Brien Landy LLP Partner, and a former assistant U. S. attorney:

An appeal “doesn't appear very likely” for Sam Bankman-Fried, he said onCDTV today.

"Mark S. Cohen, SBF’s attorney is a very able lawyer … but on the face of it, there doesn't seem to be much for them to work with here," O’Brien said. The "trial was very well-tried by the government."

But he doesn’t think Sam Bankman-Fried will spend the rest of his life in prison, more like "something in the neighborhood of 15 years, or maybe even 20 years." "He's a relatively young man, his whole life is in front of him," O’Brien said.

"I don't think the judge is going to want to destroy his chances of having a full and productive adult life."

Yat Siu, Animoca Brands executive chairman:

SBF's downfall had “really cast a dark shadow over the entire industry” and this verdict serves as “a new beginning.”

This verdict made it clear this was “simply a case of fraud. It wasn’t a case of the industry having an issue.”