Crypto Traders Are Ready to Move Past Sam Bankman-Fried

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At the height of Sam Bankman-Fried’s influence and power, there was a mostly unspoken question as to how FTX could be spending so profligately on advertisements and investments. The exchange, often cited as the third largest by volume before its epic collapse, was suspected to be unprofitable when compared to competitors. Something of an understatement, in hindsight.

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Founded in 2017, and ultimately rocketing to a valuation of $32 billion, FTX had also accrued a lifetime net loss of $3.7 billion before SBF’s multi-billion dollar fraud was even revealed. Those carryover losses were even offset by a wildly profitable bull market in 2021, a year that FTX tax filings show it netted $377 million in profit (Coinbase, by comparison, earned $3.6 billion profit in 2021 with over over 10x the headcount).

We now know, according to expert testimony from forensic accountants during SBF’s excruciating trial, that spending by the wannabe “JP Morgan of Crypto” was funded by unsuspecting FTX customers. SBF directed a score of buyouts, acquisitions and real estate purchases, hundreds of millions of dollars in political and charitable “donations” as well as billions in venture investments and other gambles.

Money also flowed from the FTX exchange into Alameda Research’s coffers, to pay off the hedge fund’s massive loan obligations, finance trades and, in at least one example, pay off Alameda’s losses from market making.

The whole situation has left a massive stain on the crypto industry. How did SBF get away with it for so long? Why did no one notice something was amiss or fail to speak up? Could something like this happen again?

There’s a saving grace in that, in the words of FTX CEO John J. Ray III, SBF’s fraud was simply “old fashioned” embezzlement. Although FTX happened to be a crypto exchange, and SBF a cryptocurrency powerbroker, the scam itself had almost nothing to do with crypto itself. (So much so that the district judge overseeing SBF’s trial actually prohibited many of the conversations about crypto that SBF’s defense team…