SBF Is Headed to Prison But FTX Will Haunt the Crypto Community For Years

Sam Bankman-Fried WatchThe Biggest Crypto Heists of 2022…So Far CCShare SubtitlesOffEnglishPer Bloomberg, the company has surrendered customer transaction data to at least five separate FBI field offices over the past several months. It’s unclear exactly why FTX has been been sharing this data. The requests have largely been to the exchange’s cloud provider, Amazon, for information pertaining to specific customer transactions as well as device IDs. A court filing reviewed by Bloomberg shows that, in at least one case, the FBI subpoenaed FTX for information relating to a Grand Jury in Philadelphia. AdvertisementRIP crypto privacy. You can mark that down as yet another promise that the industry hasn’t managed to keep to its customers. It certainly won’t be the last.AdvertisementSo long, Sam, and thanks for all the theft In my opinion, SBF’s conviction seems to mark the end of something: the era of crypto idealism. Once upon a time web3 proponents talked zealously of their products’ potential to change the world. You don’t hear so much about that anymore. Indeed, with FTX in tatters and its former leader headed up the river, is it too much to ask that we all just quit this bonkers industry already?AdvertisementAt the very least, web3 fans must be feeling burned right now. Before his downfall, Sam Bankman-Fried was one of the most well-connected and powerful executives in the tech industry and, for a time, FTX was considered the most trusted exchange in crypto. The company even tried to position itself as the “savior” of its ailing industry by offering lines of credit to other, struggling businesses. During its heyday, countless across the U.S. political spectrum, reportedly in the hopes of currying regulatory leniency. All of that credibility evaporated last November, when the exchange abruptly In the pandemonium that followed the exchange’s collapse, questions loomed about how so much money could be missing or why a business with such clout had suddenly become insolvent. The answer eventually turned out to be: because FTX was an insane company that operated less like an actual business than a AdvertisementBut, frankly, the company’s downfall really shouldn’t be that surprising. There were plenty of red flags in the lead up to its collapse—perhaps the biggest one being that FTX was...you know, a crypto company. At this point, how many platforms have promised the moon to investors, pumped up their stocks with FOMO, then swindled customers before flaming out in a blaze of glory? I’m not keeping an official tally or anything, but it sorta seems like it’s a lot of them.Relatedly, can we please send the cult of the crypto leader into permanent exile alongside SBF? Bankman-Fried was once portrayed by top media outlets as an eccentric but brilliant businessman, crypto’s Steve Jobs with weird hair. It’s obvious now how irresponsible that was. After his arrest and throughout the monthlong trial, his lawyers had to pivot his image slightly—taking it from crypto’s “boy king” to that of a humble “math nerd,” one who was simply out of his element in running a profitable, fast-growing company. Federal prosecutors, meanwhile, presented another, potentially simpler explanation of his character: that he, like other crypto criminals before him, was just a greedy liar who invented byzantine schemes to steal billions of dollars in customer funds. Now crypto’s former golden boy is stuck behind bars, waiting to hear how long it’ll be until he can get out and remake his image yet again, potentially this time to do the whole bad boy AdvertisementYou’d certainly hope that the story of FTX would permanently disabuse web3's most ardent supporters of the many delusions that have surrounded the industry. But that’s probably not going to be the case. In the immortal words of George W. Bush, “Ya fool me, we can’t get fooled again.” If only he were right.

Based on reporting by gizmodo.com.