The Sam Bankman-Fried trial is over. What happens now?

After a much-anticipated trial that lasted over a month, Sam Bankman-Fried, former head of the now-defunct cryptocurrency exchange FTX, has been convicted of stealing nearly $10 billion from his customers, the Wall Street Journal reports. 

Conviction on all seven counts.

The US Department of Justice released a statement from the US attorney for the Southern District of New York explaining that Sam Bankman-Fried was “charged with a wide-ranging scheme to misappropriate billions of dollars of customer funds deposited with FTX and mislead investors and lenders to FTX and to Alameda Research.” Alameda was FTX’s sister hedge-fund, also owned by Bankman-Fried. After conducting what Attorney Damian Williams called “one of the biggest financial frauds in American history,” the fallen crypto-wunderkind was found guilty on all seven counts brought against him, including wire fraud, conspiracy to commit wire fraud, conspiracy to commit securities fraud, conspiracy to commit commodities fraud, and conspiracy to commit two different types of money laundering. 

A run on tokens exposed fraud.

As TechCrunch recounts, Bankman-Fried was indicted by the US Department of Justice in December 2022, not long after newsite CoinDesk published an Alameda balance sheet indicating the investment firm was overflowing with FTX tokens, which led to a run on FTX customer funds that resulted in the ultimate collapse of the exchange. During the trial, the Verge explains, the defense insisted Bankman-Fried didn’t steal any funds, but was merely borrowing them to keep Alameda afloat, and was unaware of the unlawful actions of the companies’ other executives, including Alameda chief executive officer (and Bankman-Fried’s ex-girlfriend) Caroline Ellison. The defendant also claimed FTX had a data protection policy to shield customers from theft (though little evidence of this policy was presented) and admitted he was unaware of how overextended the exchange had become due to the lack of a proper risk management team. 

The prosecution, however, asserted that the defendant knowingly made false promises to investors and misused their funds, not just for Alameda, but for his own personal expenses. Ellison herself was the prosecution’s star witness, and as Time details, the hefty pile of evidence against Bankman-Fried included digital trails like Google Meet logs and spreadsheet metadata that demonstrated the defendant was very aware of his companies’ illicit activities and willingly lied about them. Bankman-Fried will have a long time to think about exactly what he did and didn’t know, as he now faces a sentencing of up to one hundred twenty years in prison. As Wired explains, the defendant has yet to be tried for additional charges including bank fraud and bribery that were added after the initial indictment, and Business Insider adds that Bankman-Fried is likely to appeal. His attorney Mark S. Cohen said in a statement. "We respect the jury's decision. But we are very disappointed with the result. Mr. Bankman Fried maintains his innocence and will continue to vigorously fight the charges against him."

FTX’s future in bankruptcy court.

As for the future of FTX, the exchange’s destiny is still in the hands of bankruptcy court. 

Coindesk says it was estimated that creditors will receive thirty-seven cents on the dollar for their losses, a promising number given the severity of the exchange’s implosion. There was a recent rally in the price of the Solana blockchain's native crypto token SOL, one of FTX’s most popular holdings and a favorite of Bankman-Fried. Even before the trial, there was speculation the exchange could be resurrected, and as a result of SOL’s rally, the value of the bankruptcy estate increased by approximately $1 billion in the past two weeks. 

What appeared new was in the end old-fashioned fraud.

So what does Bankman-Fried’s conviction mean for the crypto industry? The case placed a spotlight on the largely unregulated market, often described as the Wild West of finance. Market analyst Noelle Acheson told Wired the case “unfairly tainted” the industry, drawing scrutiny from regulators and potential investors. Considering that during the trial Bankman-Fried admitted he’d at least once said “Fuck regulators,” it’s not difficult to see how the trial could serve as a cautionary tale of what can go wrong when the digital currency market goes unchecked. However, the industry is largely relieved that Bankman-Fried was found guilty, as the prosecution emphasized that the defendant’s criminal acts had little to do with any inherent risks of the crypto market itself. US Attorney for the Southern District of New York Damian Williams explained that “while the cryptocurrency industry might be new and the players like Sam Bankman-Fried might be new, this kind of corruption is as old as time. This case has always been about lying, cheating, and stealing, and we have no patience for it.” Carl Tobias, chair of the University of Richmond law school, told the Guardian, “The southern district played it right by portraying it as a fraud case, not as a complicated cryptocurrency notion that was more complex than it needed to be. That’s clearly the way the jury saw it, and that was compelling to them.” Former FTX customers are also pleased, seeing the decision as a deterrent for future criminal activities. Investor Pat Rabbitte stated, “The US justice system has worked,” adding that Bankman-Fried’s sentencing “may help the next would-be SBF think twice.”