Sam Bankman-Fried’s Dream Came True

If there’s a single image that defines the crypto frenzy of 2021 and 2022, it’s that of the actor Matt Damon, calm and muscled, delivering the immortal proverb “Fortune favors the brave.” It was part of an ad for Crypto.com, yet it somehow captured the absurdity of what the crypto industry promised at the time: not just a digital asset, but a ludicrously magnified vision of the future.

Sam Bankman-Fried was the opposite of all that. The crypto mogul did not outwardly aspire to build futuristic crypto-powered cities or hype up ape-themed NFT video games. Even though he was a persistently disheveled Millennial who apparently slept on a bean bag, Bankman-Fried was the industry’s rule-following adult in the room. Regulating crypto was a good idea, he often said, even if it came at the expense of his business.

SBF, it turns out, was not a rule follower. In November 2022, FTX—his $32 billion crypto exchange—was suddenly unable to pay out customer deposits and collapsed soon after. Almost exactly a year later, SBF was convicted of seven counts of fraud and conspiracy after a trial that led his own lawyer to call him “the worst person [he’d] ever seen do a cross-examination.” This morning, Bankman-Fried was sentenced to 25 years in federal prison—a judgment that marks the end of a protracted legal saga, and one of the most striking downfalls in the history of American finance.

But in the interim, the crypto industry has ironically become more similar to the vision that SBF always said he had for it. SBF and many of his more explicitly anti-government competitors are out of the picture, the NFT-driven hype bubble has summarily popped, and more and more crypto-backed investment products are making their way into the mainstream. Maybe now crypto is finally ready to grow up.

SBF had always distinguished himself from other crypto CEOs with his relatively sober rhetoric around what these tokens could actually do for people. Crypto was invented at the height of the Great Recession as a decentralized alternative to the traditional financial system—a place explicitly beyond the purview of big banks and heedless regulators.

For executives like the Winklevoss twins, who run a crypto firm called Gemini, the appeal is at least partly ideological, a potential path to self-determination. “Bitcoin is your best defense against the Fed,” Tyler Winklevoss wrote on X in 2021. The eccentric software magnate and crypto influencer Michael Saylor once famously described Bitcoin as “a swarm of cyber hornets serving the goddess of wisdom, feeding on the fire of truth, exponentially growing ever smarter, faster, and stronger behind a wall of encrypted energy.” (Don’t think about it too hard.)

This sort of breathlessness is par for the course in crypto, but SBF signaled that he wanted to work within the established system, as opposed to building parallel rails. When he founded FTX, in 2019, Bitcoin was a decade old but still closely associated with fraud and bubbles. As a businessman and trader, he tried to fast-track the process of bringing crypto mainstream, guiding this world of notoriously lawless, scam-ridden financial instruments into the full light of regulatory clarity and cultural maturity. When FTX bought the naming rights to the Miami Heat’s basketball stadium’s main sports arena, in 2021, and spent millions on a Super Bowl ad in a bid to make the company a household name, SBF claimed it was all part of a plan to build that legacy as a shepherd for the industry.

Of course, this was all downstream from SBF’s carefully cultivated image—part of what built his reputation outside the finance world. His obsession with giving his money away (he once said he would spend more than $100 million to stop Donald Trump in 2024) underlay a mentality that crypto is simply a pathway to money, rather than a statement in and of itself. During the trial, SBF’s lawyers quoted his father saying it explicitly: “Sam started FTX as a way to earn to give.” His carefully cultivated image even made it to today’s sentencing: According to one reporter, SBF’s defense described him as a friend to animals and a charitable giver.

It’s hard to say how much of that image was real; in one memo to himself, revealed during the trial, SBF apparently considered “com[ing] out as Republican.” And where is crypto now? SBF is going away, and his onetime rival Changpeng Zhao was recently forced to resign from his position as CEO of the largest crypto exchange in the world after pleading guilty to violating money-laundering laws (the new venture he launched while awaiting sentencing, an education start-up called Giggle Academy, is decidedly not a crypto company). Do Kwon, who co-founded one of the projects responsible for the 2022 crypto crash, was arrested in Montenegro last year and is on trial for fraud.

Although it certainly helps that these rule breakers are out of the picture, crypto’s subdued demeanor in 2024 has a lot to do with the fact that government regulators have made a point of nailing crypto cowboys such as SBF and Zhao to the wall. It goes beyond specific vendettas against bad actors. SEC Chairman Gary Gensler—seen by many as the crypto industry’s biggest nemesis—recently described crypto as a “a field that’s been rife with fraud and manipulation.” Last year, mostly one of sobriety and recovery for crypto, was punctuated by the SEC’s near-constant announcements of new fines for misbehaving companies in this industry.

Crypto’s cultural profile remains low relative to the fever pitch of 2021, but the crypto industry is somehow on the road to recovery. Coins are up across the board. Bitcoin ETFs—long hailed as a kind of messianic vehicle for bringing the mainstream onboard the crypto train—are finally out in the world. And even blockchain-oriented venture-capital firms seem to be emerging from hibernation. Call it cautious optimism: Although crypto won’t ever be the kind of buttoned-up, totally law-abiding industry the U.S. government would probably like it to be (look no further than the recent meme-coin frenzy to see this puerility in action), it now appears far more integrated into the existing financial system than it did just a few years ago.

One need only glance at the many dozens of pages of victim-impact statements now filed with the Southern District of New York to get a sense of the real harm caused by the FTX fraud. As the gap between crypto the industry and crypto the cypherpunk paradigm continues to widen, today’s sentencing serves as a stark reminder of what crypto really is in practice. It turns out to be a lot like how SBF saw crypto in the first place. No more illusions, no more world-changing expressions of libertarian values. In a post-FTX world, maybe crypto is really just money.