Sam Bankman-Fried’s conviction is a “warning” to crypto wrongdoers, the chief government prosecutor overseeing his case said at the courthouse entrance late Thursday.
Damian Williams, the U.S. Attorney for the powerful Southern District of New York, told a gaggle of reporters crowded on the courthouse entrance that federal agents and lawyers have “handcuffs for all” fraudsters and crooks.
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“Here’s the thing: The crypto cryptocurrency industry might be new. The players like Sam Bankman-Fried might be new. But this kind of fraud, this kind of corruption is as old as time,” Williams said.
Williams’ statement came minutes after his team of federal prosecutors secured a “guilty” verdict on all seven counts of fraud and conspiracy against the former CEO of FTX, a crypto exchange that was once worth $32 billion.
Exactly one year ago, the young billionaire’s crypto empire began to crumble when CoinDesk published a story based on the private balance sheet of Alameda Research, his trading firm. As prosecutors and even defense lawyers outlined during the five-week trial, that article set off a chain of events that ended in FTX’s bankruptcy and the revelation that Alameda had taken billions of dollars of FTX customers’ cash.
Williams was on hand to watch some of the trial’s highlights, including closing arguments and the reading of the verdict. He walked into the packed courtroom late Thursday wearing a tan peacoat and a tightly tailored suit. At times during the proceeding he smiled, including when Judge Lewis Kaplan discussed Bankman-Fried’s sentencing, scheduled for next March.
His district – the federal judicial system’s influential artery for prosecuting high-profile financial frauds, including Bernie Madoff’s – has more crypto cases on the way. Next month, Mango Markets exploiter Avraham Eisenberg is scheduled to stand trial for the theft of over $100 million in crypto from a decentralized exchange.
That case and others will push the limits of the government’s policing of crypto’s wild west. It may well force prosecutors to delve deep into complex crypto concepts, like “decentralized exchanges,” “decentralized autonomous organizations,” “perpetual swaps” and other mumbo-jumbo from an industry that is constantly rewriting itself.
The prosecutors’ success against Bankman-Fried stems at least in part from their efforts to keep things simple – or as simple as possible given the heady circumstances. Throughout the trial they deemphasized the hard-to-follow crypto concepts in favor of a (relatively) simple narrative of traditional fraud, while avoiding entirely thornier, tertiary issues, like the legality of the FTT token issued by FTX.
That might not be possible in the cases to come, some of which are intrinsically tethered to mind-bending crypto concepts. But if Williams’ courthouse statement is anything to go by, the SDNY is gearing up to take down more complex cases.
“This is what relentless looks like,” he said.