Sam Bankman-Fried Found Guilty; What Comes Next?

Prosecutors want to get it right, and fast verdicts are often a good indication. So, after a four-week trial, on a seven-count indictment, for jurors to have reached a verdict in approximately four and a half hours, it appeared the jury had likely agreed with prosecutors and had likely found Sam Bankman-Fried guilty. And, indeed, they had.

Bankman-Fried was found guilty on all seven counts as charged in the indictment—two counts of wire fraud, two counts of conspiracy to commit wire fraud, and one count each of conspiracy to commit securities fraud, conspiracy to commit commodities fraud, and conspiracy to commit money laundering.

So, what comes next?

What’s Next For Sam Bankman-Fried?

Bankman-Fried is set for sentencing on March 28, 2024. Between now and that date, a presentence investigation will be conducted, a presentence investigation report will be prepared, and sentencing memoranda will be submitted to the court by both the government and the defense.

Although Bankman-Fried could reportedly face 110 years in prison, sentencing in federal criminal cases is based on sentencing guidelines which must be calculated, and Judge Lewis Kaplan, who presided over the Bankman-Fried trial, will then have discretion.

Meanwhile, Judge Kaplan has asked the government to indicate by February 11, 2024 whether it plans to proceed against Bankman-Fried on criminal charges involving the alleged payment of a $40 million bribe to officials in China, and criminal charges involving an alleged conspiracy to make illegal political donations in the U.S. That trial is set for March.

Setting aside the criminal charges against him, there are still the cases brought against Bankman-Fried by the Securities and Exchange Commission and the Commodity Futures Trading Commission.

And then there are the civil lawsuits in which Bankman-Fried is a defendant.

What’s Next For Cryptocurrency?

Cryptocurrency is young. Bitcoin launched in 2009 and other cryptocurrencies followed thereafter. Whether cryptocurrency is a sector of its own or a part of the larger financial sector, cryptocurrency will continue to evolve.

While Bankman-Fried and his former exchange, FTX, have been grabbing headlines, interest in cryptocurrency from larger, more mature names—perhaps most notably at the moment, BlackRock—has been grabbing headlines as well. And whether that interest comes from a belief that cryptocurrency is the future of money, or simply a recognition that there is demand from customers and money to be made, the interest is notable.

So, while many may point to the Bankman-Fried verdict as a “pull the fire alarm” moment, begging for action by regulators, the interest of larger, more mature financial firms should help regulators think differently, and more considerately, about cryptocurrency.

For Customers, Lenders, And Investors?

Whether cryptocurrency is the future of money, or simply something to be traded, most people are still not using cryptocurrency to pay for pizza—purportedly, the first use case for Bitcoin.

For countries with unstable national currencies, however, cryptocurrency may be a way to get more people into the global economy. Depending on one’s priorities, that might be crypto’s greatest promise.

Meanwhile, for customers, lenders, and investors, the takeaway from the Bankman-Fried case should not be a lesson about cryptocurrency, but a lesson about fraud.

For Lawyers, Accountants, And Investigators?

Cryptocurrency does not appear to be going away anytime soon. For lawyers, accountants, and investigators, there is a conversation that may need to be had.

Set aside criminal defense attorneys representing clients charged in cases involving cryptocurrency.

For trusts and estates attorneys, crypto might be an asset that needs to be protected. For family law attorneys, crypto might be an asset that needs to be divided. For asset forfeiture attorneys, know that crypto is an asset that prosecutors will seek to seize and forfeit.

Accountants need to be asking their clients whether those clients have bought or sold any crypto.

And investigative consultancies will continue to be called upon because crypto has been hacked, crypto has been stolen, an extortion or ransomware demand is being made for payment in crypto, an asset tracing engagement requires the tracing and recovery of crypto, or a client is planning a major investment in a cryptocurrency exchange and, in the wake of FTX, recognizes the need for investigative due diligence.

For Prosecutors And Law Enforcement?

Finally, for prosecutors and law enforcement, what comes next is nothing new.

One of the most interesting questions asked by a reporter during the Bankman-Fried trial was about “the significance for the DOJ of the opportunity to claim a crypto scalp.”

Honestly, prosecutors do not think of their jobs as “claiming scalps.” Or, at least they shouldn’t. Prosecutors in the United States occupy a special role within the justice system, and it is the responsibility of a prosecutor not merely to seek convictions, but to seek justice.

Moreover, the Bankman-Fried case was never about crypto. It was always about fraud.

Ideally, Bankman-Fried’s conviction and eventual sentence will have a chilling effect on anyone who might consider becoming the next Bankman-Fried, but cryptocurrency will continue to present itself in cases in the U.S. and around the world.

In August, in Turkey, the head of a cryptocurrency exchange was sentenced to 11,196 years after being convicted in a case reportedly involving fraud, money laundering, and organized crime.

In Singapore, police continue to investigate an approximately $2 billion money laundering case in which, among other assets, approximately $28 million in cryptocurrency has reportedly been seized.

And this week, in the Eastern District of New York, prosecutors announced the arrests of founders and executives of a digital asset company involved in a multimillion-dollar international fraud scheme.

For prosecutors and law enforcement in the Southern District of New York, with a guilty verdict in the Bankman-Fried case now secured, there will be post-trial proceedings and a sentencing for which to prepare, as well as other cases that need to be investigated, indicted, or tried. Just as the Bankman-Fried case was never about crypto, convicting Bankman-Fried was not about claiming a crypto scalp. It was about seeking justice. Bankman-Fried has been found guilty, but for prosecutors and law enforcement, for the Department of Justice, there is always work to be done. Nothing changes.