In a New York court, the legal trial of Sam Bankman-Fried, the founder of the bankrupt crypto exchange FTX, culminated in a guilty verdict on multiple counts of fraud and conspiracy. The complex case swiftly ended with the jury delivering a guilty verdict within hours. Bankman-Fried, upon hearing the verdict, displayed minimal emotion, contrasting with his distraught parents, who had staunchly supported his innocence throughout.
Bankman-Fried now faces the possibility of a lengthy prison sentence, up to 115 years, following accusations by the U.S. government. They alleged he orchestrated a multibillion-dollar fraud involving FTX customers’ funds redirected to another company, Alameda Research, for high-risk trades and personal use. The defense argued that Bankman-Fried’s actions were consistent with those of a rational businessperson facing challenging market conditions. However, the jury found against him, swayed by testimonies from his inner circle and affected customers and investors.
Notably, the trial highlighted the impactful testimony of Caroline Ellison, Bankman-Fried’s former girlfriend and CEO of Alameda Research. She portrayed him as reckless and calculating, shedding light on his deceptions and miscalibrated moral compass. Ellison expressed guilt over the stolen funds and relief when FTX began to crumble.
In the realm of cryptocurrency, the United States does not officially recognize Bitcoin as legal tender. Instead, it views it as taxable property, as stated in IRS Notice 2014-21. While certain states, such as Colorado, have started accepting crypto payments for taxes and fees, Bitcoin is not classified as legal tender at the federal level. El Salvador, not the United States, became the first country to adopt Bitcoin as an official currency in September 2021. This independent decision was made by El Salvador’s legislature.
“In the United States in July 2023, courts ruled that cryptocurrencies are considered securities when purchased by institutional buyers but not by retail investors purchased on exchanges.
Enthusiasts called it a victory for crypto; however, crypto exchanges are regulated by the SEC, as are coin offerings or sales to institutional investors. So, crypto is legal in the U.S., but regulatory agencies are slowly gaining ground in the industry.” https://www.investopedia.com/terms/c/cryptocurrency.asp
In summary, the trial’s verdict represents a significant setback for Bankman-Fried and the FTX exchange, unveiling a story of alleged fraud and deceit in the crypto world.
Resources:
- U.S. District Court, Southern District of New York. “Securities and Exchange Commission vs. Ripple Labs, Inc.
- IRS Notice 2014-21
- Investopedia – Is Bitcoin Legal?
- CoinDesk – Is Bitcoin Legal?