British lawyers specialising in digital assets and fraud have noted the 'impressive' speed with which the US authorities were able to obtain the conviction of former 'crypto king' Sam Bankman-Fried. While the fraud had little to do with the technicalities of cryptocurrencies, experts noted that the case will be a landmark for the sector.   

Following a month-long trial, a federal jury in New York last week found the former billionaire Bankman-Fried guilty of seven counts of fraud and money laundering. The jury's  verdict followed less than five hours of deliberations. Bankman-Fried will be held in custody until his sentencing on 28 March next year. He faces up to 110 years in prison.

Sam Bankman-Fried, former FTX chief executive, leaves Manhattan federal court in New York City

Bankman-Fried was convicted on seven counts just a year after FTX crypto exchange went bankrupt

Source: John Nacion/Shutterstock

Commenting on the case, Amy Harvey, partner at London firm Ontier and a specialist in fraud and digital asset matters, noted that the prosecution was treated primarily as a fraud case, not a crypto case. 'The prosecutors focussed on the fact that it was a multi-billion dollar fraud designed to make SBF the “king of crypto” - ultimately he took customer assets and lied about what he was going to do with them. It wouldn’t have mattered if the case concerned cash or any other asset class (digital or otherwise), the long-standing laws and usual considerations in relation to fraud (in this case from a US perspective) applied. This is a critical lesson other crypto-providers should heed, regardless of the relative lack of regulation in the sector. No business owner or organisation is above the law. 

'Secondly, this case has been dealt with at impressive speed, given FTX only went bankrupt last November. Not only do we have the SBF verdict but a number of his so-called accomplices have also pleaded guilty. In addition, it has been reported that many FTX customers’ assets have already been recovered via civil means which is impressive and should be reassuring to crypto-investors concerned about the future of the asset class. It shows what can be achieved when the political will is there.'

Syed Rahman, a cryptocurrency specialist at financial crime firm Rahman Ravelli, said: 'This is a landmark case for the crypto industry – and not in a good way. There will be many who will now equate crypto with the activities of FTX and, as a result, will want little or nothing to do with the sector.' However Rahman stressed that 'this was a case about criminality – not the technology. This was a trial of one individual rather than the whole crypto sector. The focus should be on the person who committed the wrongdoing.'

Rahman also noted the speed of the guilty verdict. 'This was one of the biggest frauds in US history and a relatively complex matter – and yet the jury came to their conclusions rather quickly.'

Bankman-Fried’s conviction highlights the importance of due diligence, Rahman said. 'This was a case that serves as a stark reminder that even those well-versed in the industry can succumb to hype and misinformation.'

 

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