If there's one image that defines the crypto frenzy of 2021 and 2022, it's that of cool, muscular actor Matt Damon, conveying the immortal adage, “Fortune favors the brave.” is. It was part of an ad for Crypto.com, but it somehow captured the absurdity of what the cryptocurrency industry promised at the time: a vision of a future that was more than just a digital asset and ludicrously expanded.
Sam Bankman Freed was the opposite of all of that. Cryptocurrency moguls ostensibly didn't want to build futuristic crypto-powered cities or promote monkey-themed NFT video games. Bankman Freed was an adult who played by the rules of the industry, even though he was clearly a disheveled millennial who slept on a bean bag.Regulating cryptocurrencies is a good idea, he said well saidEven if it costs him his business.
It turns out that SBF did not follow the rules. In November 2022, FTX (his $32 billion cryptocurrency exchange) suddenly became unable to pay customer deposits and went bankrupt soon after. Almost exactly a year later, SBF was found guilty of seven counts of fraud and conspiracy after a trial in which he was called “the worst person” by his own lawyer. [he’d] I have never seen anyone cross-examine. ” Bankman Freed was sentenced this morning to 25 years in federal prison. The ruling ended a long legal battle and marked one of the most notable downfalls in American financial history.
But in the meantime, ironically, the cryptocurrency industry more It's similar to the vision that SBF always talked about. With SBF and many of its more explicitly anti-government competitors out of the picture, the NFT-driven hype bubble is suddenly bursting and a growing number of crypto-backed investment products are entering the mainstream. Perhaps now cryptocurrencies are finally ready to grow.
SBF has always set itself apart from other crypto CEOs with its relatively sober rhetoric about what these tokens can actually do. do For the people. Cryptocurrency was invented in the midst of the Great Recession as a decentralized alternative to the traditional financial system. This is clearly an area beyond the remit of big banks and careless regulators.
For executives like the Winklevoss brothers, who run a cryptocurrency company called Gemini, this appeal is at least partly ideological and a potential path to self-determination. “Bitcoin is the best defense against the Fed,” Tyler Winklevoss wrote for X in 2021. Michael Saylor, the eccentric software mogul and crypto influencer, was once famous. explained Bitcoin is “a swarm of cyber hornets in service to the Goddess of Wisdom, feeding on the flame of truth and growing smarter, faster, and stronger behind a wall of encrypted energy.” Please do not do so.)
This kind of breathlessness is common in crypto courses, but SBF has expressed a desire to work within an established system rather than building parallel rails. When he founded his FTX in 2019, Bitcoin had been around for 10 years, but was still closely associated with fraud and bubbles. As a businessman and trader, he seeks to expedite the process of bringing cryptocurrencies into the mainstream, guiding the notoriously lawless and fraud-ridden world of financial products in full light of regulatory clarity and cultural maturity. did. When FTX purchased the naming rights to the Miami Heat's basketball stadium's main sports arena in 2021 and spent millions of dollars on Super Bowl advertising to keep the company's name well-known, SBF He claimed it was all part of the plan to build it. A legacy as a shepherd of the industry.
Of course, this was all downstream from the image that SBF had carefully cultivated, and was part of what built his reputation outside the financial world. His obsession with donating money (he once said he would spend more than $100 million to stop Donald Trump in 2024) is that cryptocurrencies are not a statement in and of themselves, but simply money. At the heart of this mentality is that it is the path to. During the trial, SBF's attorney said his father made it clear that “Sam started FTX as a way to donate and make money.” His carefully cultivated image was reflected in today's verdict. According to one reporter, SBF's defense attorney described him as a friend of animals and a philanthropist.
It's hard to say how much of that image was real. In a note to himself revealed during the trial, SBF apparently thought “com.”[ing] I'm running as a Republican. ” And where are cryptocurrencies now? SBF is defunct, and its former rival Zhao Changpeng recently pleaded guilty to violating money laundering laws, forcing him to resign as CEO of the world's largest cryptocurrency exchange (pending sentencing) In the meantime, he launched a new business called Giggle Academy (which is clearly not a cryptocurrency company). Do Kwon, who co-founded one of the projects responsible for the 2022 cryptocurrency crash, was arrested in Montenegro last year and is on trial for fraud.
While it certainly helps that these rule-breakers are less visible, crypto's subdued demeanor in 2024 means that government regulators will be more focused on nailing crypto cowboys like SBF and Zhao to the wall. It has a lot to do with the fact that It goes beyond specific revenge against the bad guys. SEC Chairman Gary Gensler (considered by many to be the crypto industry's arch-enemy) recently described cryptocurrencies as “a field rife with fraud and manipulation.” The past year has been largely a year of sobriety and recovery for cryptocurrencies, punctuated by the SEC's near-continuous announcement of new fines for companies that cheat in this industry.
Although the cultural profile of cryptocurrencies remains low compared to the craze of 2021, industry He is on the road to recovery. Coins are rising across the board. Bitcoin ETFs, long hailed as a kind of savior vehicle to bring the cryptocurrency train mainstream, have finally arrived in the world. And even blockchain-oriented venture capital firms appear to be emerging from hibernation. Call it cautious optimism. Cryptocurrency will probably never become the solid, fully law-abiding industry that the US government would like it to be (to see this naivety in action, check out the recent meme coin ), which now appear much more integrated into the existing financial system than they did just a few years ago.
One need only take a quick look at the dozens of pages of victim impact reports currently filed in the Southern District of New York to understand the true damage caused by FTX fraud. As the gap between the crypto industry and the cypherpunk paradigm of cryptocurrencies continues to widen, today's ruling serves as a stark reminder of what cryptocurrencies are really like. It turns out that it is very similar to how SBF viewed cryptocurrencies in the first place. No more illusions, no more expressions of world-changing libertarian values. In a post-FTX world, cryptocurrencies may actually become just money.
