It’s been another hectic week in crypto, with Sam Bankman-Fried’s month-long trial coming to an end, new regulatory proposals from the UK and European Union and a slew of third-quarter company earnings. Meanwhile, bitcoin is still climbing, and is trading above $35,000 at the time of writing.
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Barbara Fried and Joseph Bankman, reacting after the verdict. REUTERS/Jane Rosenberg
Bankman-Fried found guilty
Almost exactly a year after his exchange FTX filed for bankruptcy, Sam Bankman-Fried was found guilty of stealing from the exchange’s customers. The jury convicted him on all seven counts to which he had pleaded “not guilty”: two for fraud and five for conspiracy.
What’s next? He could face decades in prison, but we won’t know until his sentencing, which is set for March 28, 2024. The judge will take factors such as his personal history and the nature of the crime into account. Caroline Ellison, Gary Wang and Nishad Singh are also yet to be sentenced.
Here’s an interesting nugget: Judge Kaplan, who presided over the case and will sentence Bankman-Fried, wrote in a 2007 article about corporate crime that “crimes committed by white collar criminals out of a studied calculation of likely costs and benefits of engaging in the criminal behavior perhaps are especially reprehensible”.
Bankman-Fried’s lawyer said his client would continue to “vigorously fight the charges”. He’s also likely to appeal. More on the possible options here.
There’s a second trial set for March, on a second set of charges that include alleged foreign bribery and bank fraud conspiracies.
The scale of Bankman-Fried’s crimes amounts to one of the biggest financial frauds in history, but he’s just one of a number of crypto bosses being pursued by the U.S. authorities. Here’s a list of who’s in trouble for what. (To be sure, investigations don’t necessarily mean wrongdoing, and charges don’t necessarily mean convictions.)
The founder and two top executives at a crypto firm called SafeMoon, whose token was once valued at more than $8 billion, have been charged with fraud. U.S. investigators said investors were told their money was “locked” safely in pools, but the defendants allegedly withdrew money to buy sports cars, expensive travel and luxury homes.
Still, the crypto world goes on. Earnings-wise, Coinbase did better than expected but still saw trading volumes decline for a second quarter running. Robinhood missed estimates, with transaction-based revenue from cryptocurrencies down 55% year-on-year. Meanwhile, PayPal investors weren’t put off by the fact the company has got a subpoena from the SEC about its stablecoin.
Swiss digital currency: The Swiss National Bank will start a pilot project using a central bank digital currency for financial institutions, with UBS involved.
UK stablecoin rules: The Bank of England told banks they must avoid the risk of customers thinking stablecoins are protected like bank deposits.
More stablecoin rules:Stablecoin issuers could be required to have sufficient funds to fully redeem investors, under rules proposed by the European Union’s banking watchdog.
Crypto advertising: A Spanish financial regulator is investigating a case of a firm possibly breaking rules around crypto advertising campaigns.
Coinbase’s users:The U.S. Supreme Court agreed to hear a dispute over whether Coinbase can move a dispute with its users into private arbitration.
PayPal’s crypto: PayPal has been registered to offer cryptoasset activities in Britain.
Beyond crypto:HSBC plans to launch a custody service for blockchain-based assets other than cryptocurrencies. Tokenised bonds, for example.
What I’m Reading
Reuters BreakingViews columnist Anita Ramaswamy says Sam Bankman-Fried’s conviction is a chance for the cryptocurrency business to move forward, allowing investors to trust what’s left of the industry.