The trial of FTX founder Sam Bankman-Fried, now coming to the end of its first week, is far bigger than just crypto. Reporters from the largest media outlets (including WIRED) have flocked to New York to cover it, TV stations are airing feature-length documentaries on the fall of the crypto exchange, and X (formerly Twitter) is ablaze with armchair analysis. But members of the crypto industry are tired of the circus before it has really even begun.
“I’m not the only one that thinks this is all just one very big distraction,” says crypto analyst Noelle Acheson, formerly of crypto brokerage Genesis. The sooner the industry is able to move beyond the “galactic embarrassment of FTX,” she says, the better. “It’s about starting again once [the trial] is done.”
When FTX went down last November, unable to meet a surge in withdrawals, it sent the industry into turmoil. Not only had billions of dollars’ worth of customer funds gone missing, but the collapse caused markets to nosedive and led to the failure of other crypto firms, a regulatory crackdown in the US, and, in a roundabout way, the fall of two crypto-friendly banks.
But the criminal trial is a sideshow to all of this, says Acheson, whose outcome will have little real impact on the prospects or trajectory of the crypto businesses that survived the shock. “It’s the stuff of a very juicy story, that’s why it has held everyone’s attention for so long … It’s the gossip we all pretend not to be interested in,” she says. “But closure will allow the industry to move on.”
At this, the first of two trials, Bankman-Fried is facing seven counts of fraud. He is accused by the US Department of Justice of misappropriating billions of dollars’ worth of customer deposits—which was allegedly used to bankroll a lavish lifestyle and buy political influence—and lying about the way his business operated.
The frustration, in crypto circles, is with the idea that the industry is on trial too—that Bankman-Fried’s alleged fraud is emblematic of the hubris and backroom maneuvering essential to crypto. They say this a case of straightforward fraud of the Bernie Madoff variety, not a reflection of issues specific to crypto businesses or technologies.
“The idea that crypto is on trial, I find ludicrous. An individual is on trial,” says Sheila Warren, CEO of the Crypto Council for Innovation, a body advocating for regulation of the crypto industry. “There is an extrapolation happening here and I don’t think it’s appropriate. The vast majority of this was good, old-fashioned, old-timey fraud.”
Bankman-Fried has denied fraud, and pleaded not guilty to the charges he faces.