Biggest Surprise of SBF Trial? That It's Happening at All

Former poster boy for cryptocurrency is in court this week, and crypto world is rooting against him
By John Johnson,  Newser Staff
Posted Oct 2, 2023 11:45 AM CDT
Crypto World Is Rooting Hard Against Its Former Poster Boy
Sam Bankman-Fried leaves Manhattan federal court in New York on Feb. 16, 2023. The fraud trial of Bankman-Fried, the founder of failed cryptocurrency brokerage FTX, begins Tuesday with jury selection.   (AP Photo/Seth Wenig, File)

This week brings a milestone in the world of cryptocurrency—the trial of accused fraudster Sam Bankman-Fried begins Tuesday in New York. Bankman-Fried, or SBF, founded the FTX exchange that famously went belly-up and cost a lot of people—many of them everyday investors swayed by celebrity endorsements—a lot of money. Not too long ago, SBF was perhaps the face of the crypto world, but if you think that world is now rallying behind him, think again. And if you think people who lost a fortune in the collapse of FTX are done with crypto, think again on that, too. Coverage:

  • Cathartic: The New York Times reports that many of those still standing in cryptocurrency are rooting for a conviction. "That will be cathartic for the crypto ecosystem," says Travis Kling of the crypto firm Ikigai Asset Management, which lost most of its assets in the FTX debacle. The sentiment is repeated again and again in the story: SBF deserves to pay, and only then will the still-reeling world of cryptocurrency be able to recover from the damage.

  • Doubling down: A story at CNBC has a similar vibe: It speaks to people who lost money in FTX as part of a documentary and finds that many are doubling down on crypto instead of running away from it. One burned investor, for example, lost $174,000 and sold his bankruptcy claim for pennies on the dollar to get $19,000—for the express purpose of reinvesting that smaller sum in crypto. Another investor tells the outlet he lost $2 million but is still bullish on bitcoin. "I know it's going to end up at over $100,000 sooner or later anyways, so for me it's a great buy," he says. The coin was trading at about $28,000 on Monday morning, down from its high of nearly $70,000 in late 2021.
  • The charges: So what did SBF allegedly do? Prosecutors say he stole billions in customer deposits to prop up his affiliated hedge fund (Alameda Research), buy real estate, and make lots of political donations to influence crypto laws. "While the case will involve the complicated world of cryptocurrencies, prosecutors are expected to try to boil it down to the simplest of terms for jurors: Bankman-Fried took money from customers and used it in ways he wasn't supposed to," per the AP. The federal charges include wire fraud, securities fraud, and money laundering, notes NBC News.
  • Biggest surprise: In the view of Alex Kirshner at Slate, maybe the biggest surprise about the 31-year-old's trial is that it's happening at all. Why no deal to avert one? The answer to that question isn't clear, and the story digs into the possibilities, including that prosecutors might want to make an example of SBF. If convicted, he faces a sentence of more than a century of prison, though he would most likely get a "decade or two."
(More Sam Bankman-Fried stories.)

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