If there is one image that defines the crypto craze of 2021 and 2022, it is that of actor Matt Damon, calm and muscular, presenting the immortal adage “Fortune favors the brave.” It was part of an ad for Crypto.com, and yet it somehow captured the absurdity of what the cryptocurrency industry was promising at the time: not just a digital asset, but a ridiculously magnified vision of the future.
Sam Bankman's Fried was the antithesis of all that. The cryptocurrency mogul didn't ostensibly aspire to build futuristic cryptocurrency cities or promote ape-themed NFT video games. Although he was a perpetually disheveled millennial who apparently slept on a bean bag, Bankman-Fried was the industry rule-following adult in the room. Regulating cryptocurrencies was a good idea It is often saidEven if it was at the expense of his business.
It turns out that SBF wasn't following the rule. In November 2022, FTX — a $32 billion cryptocurrency exchange — suddenly became unable to pay customer deposits and collapsed soon after. Almost a year later, SBF was convicted of seven counts of fraud and conspiracy after a trial that prompted his lawyer to describe him as “the worst person.” [he’d] “I ever saw an interrogation take place.” This morning, Bankman-Fried was sentenced to 25 years in federal prison, a sentence that marks the end of a long-running legal saga, and one of the most notable failures in the history of American finance.
But in the meantime, the cryptocurrency industry has become ridiculous more Similar to the vision SBF always said he had for her. The SBF and many of its explicitly anti-government competitors are out of the picture, the NFT-driven hype bubble has burst, and more and more cryptocurrency-backed investment products are making their way into the mainstream. Perhaps now cryptocurrencies are finally ready to grow.
SBF has always distinguished itself from other cryptocurrency executives with its relatively sober rhetoric about what these tokens could actually be. Do For people. Cryptocurrencies were invented at the height of the Great Recession as a decentralized alternative to the traditional financial system, a place that fell clearly outside the purview of big banks and neglectful regulators.
For executives like the Winklevoss twins, who run a cryptocurrency company called Gemini, the appeal is at least partly ideological, a potential path to self-determination. “Bitcoin is your best defense against the Fed,” Tyler Winklevoss wrote on X in 2021. The eccentric software mogul and cryptocurrency influencer Michael Saylor was once famous. described Bitcoin is “a swarm of cybernetic hornets serving the gods of wisdom, feeding on the fire of truth, growing increasingly smarter, faster, and stronger behind a wall of cryptographic energy.” (Don't think about it too much.)
This kind of shortness of breath is par for the course in the cryptocurrency space, but SBF has indicated that it wants to work within the existing system, rather than building parallel bars. When he founded FTX, in 2019, Bitcoin was a decade old but still closely associated with fraud and bubbles. As an entrepreneur and trader, he has tried to accelerate the mainstreaming of cryptocurrencies, guiding this world of notoriously lawless and fraud-riddled financial instruments into the full light of regulatory clarity and cultural maturity. When FTX bought the main sports arena naming rights to the Miami Heat's basketball arena, in 2021, and spent millions on a Super Bowl ad in an attempt to make the company a household name, SBF claimed it was all part of a plan to build that arena. A legacy as a patron of the industry.
Naturally, all of this was a result of SBF's carefully cultivated image – part of what built its reputation outside the financial world. His obsession with donating his money (he once said he would spend more than $100 million to stop Donald Trump in 2024) establishes a mindset that cryptocurrencies are merely a path to money, not a statement in and of themselves. During the trial, SBF's attorneys explicitly quoted his father as saying, “Sam started FTX as a way to make money and give back.” His carefully cultivated image even made it into today's ruling: according to one reporter, the SBF's defense described him as an animal friend and charitable donor.
It is difficult to say how real this image was; In one of the notes addressed to him, which was revealed during the trial, SBF appears to have considered “com[ing] Out as a Republican.” Where is the encryption now? SBF will disappear, and its former rival Changpeng Zhao was recently forced to resign from his position as CEO of the world's largest cryptocurrency exchange after pleading guilty to violating money laundering laws (the new project he launched while awaiting sentencing is an educational project). The startup, called Giggle Academy, is definitely not a cryptocurrency company.) Do Kwon, who co-founded one of the projects responsible for the 2022 cryptocurrency collapse, was arrested in Montenegro last year and is on trial for fraud.
While it certainly helps that rule-breakers are out of the picture, crypto's subdued behavior in 2024 has a lot to do with the fact that government regulators have made sure to nail crypto cowboys like SBF and Zhao to the wall. It goes beyond specific vendettas against bad actors. SEC Chairman Gary Gensler, considered by many to be the cryptocurrency industry's biggest enemy, recently described cryptocurrencies as “an area rife with fraud and manipulation.” The past year, which has been mostly a year of sobriety and recovery for cryptocurrencies, was punctuated by the SEC's near-constant announcements of new fines for companies misbehaving in the industry.
Crypto's cultural profile is still low compared to the 2021 fever, but the cryptocurrency is still down. industry Somehow on the road to recovery. Coins are up across the board. Bitcoin ETFs — long hailed as a kind of vehicle in waiting to bring the trend aboard the cryptocurrency train — are finally making their way into the world. Even blockchain-oriented venture capital firms appear to be coming out of hibernation. Call it cautious optimism: Although cryptocurrencies will never be the kind of completely law-abiding industry that the US government might want them to be (look no further than the recent meme currency craze to see this absurdity in action) they now appear to be more integrated. in the current financial system compared to what it was just a few years ago.
One need only look at the dozens of pages of victim impact statements now filed with the Southern District of New York to recognize the true harm caused by the FTX scam. As the gap between the cryptocurrency industry, cryptocurrencies, and the cypherpunk model continues to widen, today's ruling serves as a stark reminder of what cryptocurrencies really are in practice. It turns out that it's very similar to how the SBF saw cryptocurrencies in the first place. No more illusions, no more world-changing expressions of libertarian values. In a post-FTX world, cryptocurrencies may just be money.
