We know he is most at ease in the casual combination of shorts and t-shirts. Sam Bankman-Fried landed on Tuesday, January 3, at the court for the Southern District of New York, in an unusual dark suit, the tie firmly tied around his clean-shaven neck. The founder of now-bankrupt cryptocurrency exchange FTX has pleaded “not guilty” to eight counts he is charged with: wire fraud, money laundering, violations of campaign finance laws elections, among others. It was his first American hearing since his extradition from the Bahamas at the end of December, where he resided. “SBF” appeared free but under close surveillance after being released on bail for the equivalent of 250 million dollars. The 30-year-old trader is hated by the crypto world for bringing down a company valued at $32 billion in just a few days, putting hundreds of thousands of clients out of business. He faces 115 years in prison in a trial expected in October, but already badly started.
His two main partners, Caroline Ellison and Gary Wang, respectively managing director of Alameda Research (a hedge fund created by SBF itself) and technical director of FTX, both pleaded guilty a few weeks ago to charges of charge similar to his. And they sat down. Ellison notably admitted that the funds deposited by FTX customers on the exchange platform were also used by Alameda Research to carry out its transactions and its loans. A computer system had even been set up to facilitate these transfers. The ex-director of Alameda Research would also have agreed with Bankman-Fried to hide these close relations between the two companies, with the customers as with the investors. It is also not impossible that Ellison and Wang are summoned to the bar in order to push their former “boss”, with whom they shared a luxurious penthouse and a life of debauchery under the Caribbean sun. Because they too risk ultimately spending many years in the shade.
A sector in search of justice
Bankman-Fried had meanwhile prepared the ground in the press and on social networks: he was, according to him, not aware of Alameda’s actions. Nor responsible for the failing accounting of his own company. One of his main mistakes, he admitted in a personal note, is only to let his guard down by working only 13 hours a day, instead of 18 when he launched his exchange platform. This falsely naive speech, which today justifies his position of “not guilty”, will necessarily have less force in the face of the overwhelming testimonies of his former friends. The New York Attorney General in charge of the prosecution is also convinced: “As today’s charges clearly show, it was not mismanagement or poor supervision, but simply intentional fraud,” said Damian Williams, on the sidelines of the announcement of the charges against Bankman-Fried. The latter may nevertheless, when he wishes, change his strategy and plead guilty at any time during the procedure.
Some consider that it is at the same time a broader trial: that of the excesses of cryptocurrencies. As a symbol, the FTX affair came to conclude the most complicated year of the young sector. A first crash, in the spring, caused by the failure of the Terra-Luna ecosystem, initially caused prices to fall and questioned the validity of many projects. Inflation and the war in Ukraine subsequently caused the market to plunge, far from the “good times” of Covid and the overabundant liquidity that had caused it to explode. Bitcoin, its star value, plummeted by more than 60% in 2022. The FTX debacle now questions the very usefulness of cryptocurrencies, whose image is tarnished by repeated scams and bankruptcies. In addition to the SBF trial, 2023 should thus be the year of regulation for cryptos. In Europe in particular, with the MiCA regulations. But in the United States too, many actors, President Joe Biden in the lead, are urgently calling for a stricter framework in order to avoid another scandal. New “Wolf of Wall Street” for Michael Saylor, “psychopath” for Changpeng Zhao (CZ), Binance, biggest “crook” of the 21st century for others… Pending a possible conviction (and better days), the In any case, the crypto world has found its perfect nemesis in Sam Bankman-Fried.