Today is the beginning of Sam Bankman-Fried’s trial, and can already count as one of the most pivotal days in crypto history. Even if nothing majorly important is happening on the stand, yet. The reason why this trial of just one man matters for an industry is simple enough: SBF, as he was sometimes chummily called, has been elevated into a symbol for everything wrong with crypto. And there’s a lot to regret.
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But it’s a mistake to say that Bankman-Fried is crypto in a nutshell, a representation of its inevitable dangers and excesses or Exhibit A of where this mostly unregulated industry will always end. That is, more or less, what New York Times crypto reporter David Yaffe-Bellany suggested in a recently co-published article: Crypto is on trial, as SBF faces a reckoning.
Per the NYT:
“It’s a fraud that was enabled and supercharged by crypto, and by crypto’s unique aspects,” said Lee Reiners, a crypto expert who teaches at Duke Law School. “It wouldn’t have been possible in any other context.”
This is an odd idea in a story that was largely just a summary of SBF’s journey through the legal system so far, but one that is probably widespread. Thankfully it’s easily dispelled by perhaps the person who groks the situation at FTX better than anyone, CEO and restructuring legend John J. Ray, who called SBF’s alleged theft of $8 billion “old-fashioned embezzlement.”
Crypto lends a patina of novelty to the situation, a sense that this is a crime only possible in the modern day, but the situation is fairly simple. SBF is accused of taking money that belonged to his customers and spending it on luxury real estate, gifts for mom and dad and vegan cheese. And his defenses are equally as classic: my girlfriend caused my financial problems, my lawyers are liars and “woops.”
But still, the idea that crypto is uniquely capable of causing a crime of this magnitude, is worth considering. Crypto is on the stand next to SBF, for better or worse, and played a pivotal role in his rise and fall — but is Sam Bankman-Fried a fair representative for a movement (of sorts) that spans industries, interests and the globe…
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