Could Robust Regulation Have Prevented the Criminal Verdict Against Sam Bankman-Fried?

Former FTX CEO Sam Bankman-Fried has been found guilty on all charges of fraud and conspiracy to commit fraud. The verdict was delivered by the jury in less than 10 minutes after several hours of deliberation at the Southern District Court of New York [source].

Throughout the trial, questions were raised about how Bankman-Fried ended up in this situation and whether it could have been prevented. Some argue that existing financial regulations could have potentially prevented the collapse of FTX. Had Bankman-Fried been required to comply with regulatory requirements, he may not have been able to commingle and embezzle customer funds [source].

FTX relied on Alameda Research as its “payment processor,” according to Bankman-Fried’s defense. The commingling of funds between FTX and Alameda’s subsidiaries, including Northern Dimension, raised concerns about transparency and accountability. Commingling of funds is considered a “dirty word” in securities law and can create potential legal issues [source].

Embezzlement, in this case, involves Bankman-Fried intentionally using billions of dollars in venture capital investments, real estate acquisitions, and political donations for personal gain. These funds did not belong to him and were essential elements in the case against him. Without proper corporate controls, there was no evidence to prove that the missing $8 billion from clients resulted from market downturn instead of misappropriation of funds [source].

Bankman-Fried had ambitious goals for FTX, including a dream of becoming the president of the United States. However, his efforts to grow FTX were futile in the face of mounting legal troubles. As Warren Buffett famously said, “You only find out who is swimming naked when the tide goes out” [source].

It is worth noting that Bankman-Fried’s conviction was not related to crypto fraud but rather traditional fraud. Theoretically, regulatory measures could have prevented commingling and embezzlement of funds. However, this case highlights the fact that individuals who believe they are invulnerable to prosecution may still engage in fraudulent activities, even in the face of existing legal safeguards [source].

Please keep in mind that this article is intended for general informational purposes only and should not be considered legal or investment advice. The views expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph or its affiliates [source].

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J-S Tremblay
About the author - J-S Tremblay

I've been involved in the cryptocurrency world since 2016 and trading since 2019. I started Moon and Lambo in 2021. I'm passionate about crypto and love to share my knowledge. I hate bankers and I hope that cryptocurrency will change the financial world for the better. View full profile...

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