Bankless’ Post

It's such an incredible statement, but true or not, there's certainly a level of absolute recklessness when it comes to compliance that cryptocurrency in general has been notorious for; it's practically been the raison d'être. I've had a hobby interest in crypto before, because I found it a fascinating proof-of-concept (although I was surprised that Bitcoin survived, as I had expected there would be sone technical flaw found someday given it was the first example of its kind), but I was disgusted by how foolish so many people involved were in terms of acting like laws simply didn't apply to them and that there would never be any consequences. I thought it was a massively missed opportunity that this community of people pointing out the fraud and lawlessness present in conventional finance would then turn around and make conventional bankers look like saints by comparison. There's a reason "SFYL" (sorry for your loss) became a running joke in crypto, and it wasn't just that the technology made it easy to make mistakes resulting in irreversibly losing one's money, but also the endemic levels of fraud and outright theft. There were times when I was tempted to get involved in running an exchange, but I recognized that there was an extraordinarily high bar to compliance there; that as great as the technical security challenges were, the legal challenges were even more difficult. So I never went down the path of starting an exchange, because I recognized that the only thing that would keep a person out of prison doing it would be for the exchange never to get big enough to matter (or to spend a massive amount of money on lawyers which I didn't have) and why start something that is going to send you to prison if you're successful? There absolutely have been a few legitimate operations that deserve recognition for taking the straight and narrow path, but with so many exchanges it wasn't so much a surprise that they went under as that they lasted so long. So whether he was reckless, naive, or is simply lying, in a way it's not a surprising statement because only someone completely oblivious to any concept of US financial regulations would start an exchange without an overwhelming sense of "I'd better have a really good team of lawyers behind me on this, because it would be really easy to commit serious federal crimes here".

Sam Bankman Fried, 32-year-old former CEO of #FTX has been sentenced to 25 years in prison on fraud charges. Bankman-Fried was found guilty on 7 counts of fraud and conspiracy on November 2. Prosecutors called it one of the biggest financial frauds in US history. He is accused of stealing $8 billion from customers in fund embezzlement. “A lot of people feel really let down. And they were very let down. And I’m sorry about that. I’m sorry about what happened at every stage”, said Bankman Fried reportedly. Prosecutors sought a sentence of 40-50 years for Sam Bankman-Fried. Many of the FTX customers who claim to have lost $19 billion after FTX went bankrupt don’t seem to be happy with 25 years of prison sentence for Friedman as it doesn’t seem enough for them. Friedman’s case is important for its consequences on the regulatory landscape of crypto trading sector. It may shape how countries like the United States will legislate to mainstream cryptocurrencies and virtual assets while ensuring the sector sticks to the ethos of fair market play and protects consumers against insider trading, market manipulation, customer fund embezzlement, alongside compliance with AML/CFT regulations. FTX fallout and crackdown on Binance along with tough scrutiny of other crypto exchanges in the United States has put a question mark on the future of crypto. In terms of consequences, the events are likely to pave way for broader regulation of the sector instead of jeopardizing its survival in long run. To put it in words of Michael Fasanello, JD  “ FTX has been compared to Enron. SBF has been compared to Madoff. Something I have been saying since this saga started -- traditional finance survived Enron and Madoff; #crypto will survive FTX and SBF.” #fraud #ftx #SBF

Absolutely, Sam Bankman-Fried’s fraudulent actions have sent shockwaves through the crypto market. As we grapple with the aftermath, it’s clear that regulations and risk management are more critical than ever. FTX's collapse is what prosecutors have called one of the biggest financial frauds in U.S. history. 🔍 Risk Mitigation: The Bankman-Fried case underscores the need for robust risk management practices. Companies must proactively identify vulnerabilities, conduct thorough due diligence, and implement safeguards to protect investors and users. 🌐 Global Cooperation: The crypto market operates across borders, making international collaboration essential. Regulatory bodies, exchanges, and industry players must work together to establish consistent standards and prevent fraud. 📈 Balancing Innovation and Security: While innovation drives the crypto space, we must strike a delicate balance. Regulations shouldn’t hold back creativity but should ensure transparency, accountability, and investor confidence. 💡 Lessons Learned: Transparency: Companies should be transparent about their operations, financial health, and security measures. Code Audits: Regular code audits can uncover vulnerabilities and prevent exploitation. Education: Educating users about risks and best practices is crucial. 🚀 The Future: Let’s advocate for a crypto ecosystem that thrives on integrity, trust, and responsible growth. Together, we can build a resilient market that benefits everyone. #Crypto #Regulation #RiskManagement #Blockchain #FTX #BankmanFried https://lnkd.in/dj88sq8k

In a landmark court ruling, Sam Bankman-Fried was sentenced to 25 years in prison yesterday for orchestrating one of the largest financial frauds in history. Through his once-celebrated crypto exchange, FTX, Bankman-Fried misused customer funds, manipulated financial markets, and downright committed accounting and equity fraud. This wide-scale embezzlement highlights the pitfalls of a traditional financial system plagued by misaligned incentives, a lack of transparency, and centralized trust — challenges that Bitcoin is designed to overcome. Bitcoin's design relies on the elimination of such centralized points of failure. It offers a transparent, immutable ledger, removing the need for trust in transactions or third parties. Ironically, the FTX collapse initially drove Bitcoin's price to record lows (compared to its fundamental value) in 2022 due to market fears. Yet, Bitcoin's resilience shines brighter than ever today, now trading above its 2021 all-time high. Closing this chapter paves the way for a new wave of Bitcoin adoption. The downfall of the FTX empire serves as a stark reminder of the world's need for decentralized infrastructure for its crucial financial services. Bitcoin emerges stronger from this episode, proving its worth and potential to redefine trust in our financial dealings.

What's your take on all CEX being regulated? If not Dex, then I think there is no way we can completely eradicate the issue of fraud from CEX except if they are in total compliance to government authorities. Most of us don't like that right? I know the answer is yes but for how long shall will continue to hear same stories once every two years or less. Many of us are always fighting against SEC but I think it's high time we look at the positive side of the organization though I personally dislike Gary Gensler. Few days ago, the issue of Kucoin was circulating about some of the exchange executive involvement in money laundering act, if not for SEC, perhaps we could be talking of another FTX right now which could have impacted the market negatively considering the size of Kucoin in the market. Anyways, am glad SBF has been sentenced and I hope this serves as deterrent to other crypto exchange executive but the question is should we leave our fate in the hands of this individuals. DEX on the other hand is not a soft landing as well due to its inherent nature and risk involvement. Perhaps the reason I have a feeling all exchanges should be regulated. On the second thought, considering Nigerian government demanding for details of top traders from Binance due to the fiasco between the two, is it really safe for users as well? So many questions popping up in my head. Do you think we can get to a point where we can say an exchange has spent over 10 to 20 years without any drama. Do you see this possibility? Let's discuss

On August 8, the U.S. District Court for the Southern District of New York entered a monumental consent order against FTX Trading Ltd. and Alameda Research LLC, securing $12.7 billion in restitution and disgorgement to compensate victims of the massive fraud orchestrated by Samuel Bankman-Fried and key FTX insiders. Key Points: - Record-Breaking Recovery: The judgment includes $8.7 billion in restitution and $4 billion in disgorgement, making it the largest victim recovery in CFTC history. - Fraudulent Practices: FTX misled customers by falsely claiming that digital assets like Bitcoin and Ether were securely held and segregated, while in reality, funds were commingled and misappropriated. - Continued Litigation: The CFTC will continue pursuing additional claims against individual defendants, seeking further restitution, penalties, and permanent bans. This landmark case underscores the CFTC’s commitment to protecting consumers in the crypto market and highlights the critical need for stronger digital asset legislation. For more updates on financial regulations and enforcement actions in the USA, follow Global Regulatory Insights! #CFTC #FTX #CryptoRegulation #FraudPrevention #DigitalAssets #FinancialRegulation #GRI

Leadership matters. The FTX saga exposes a fundamental flaw - a lack of focus on building a strong ethical risk culture. This isn't about micromanagement; it's about establishing a framework for responsible business practices and mitigating potential risks. FTX prioritized short-term gains over long-term sustainability. This is a recipe for disaster. Customers deserve better. They deserve leaders who are committed to building trust by fostering a culture of ethical risk taking. This kind of leadership doesn't just prevent short-term failures; it builds trust and lays the foundation for long-term success. Hope the FTX collapse will be a catalyst for positive change in the crypto industry (and start ups). Let's move away from hype and towards responsible investment practices. The future of crypto now depends on it. #LeadershipMatters #Leadership #Fraud #Cryptocurrency #RiskCulture #BusinessEthics

FTX just keeps delivering, convictions. Ryan Salame, a former top executive at FTX and member of Sam Bankman-Fried's inner circle, has been slapped with a hefty prison sentence. Salame is one of four top executives to plead guilty since the crypto exchange's collapse in 2022. The 30-year-old Massachusetts native was a high-ranking official at Bankman-Fried's Alameda Research before becoming co-CEO of FTX's Bahamian affiliate in 2021. He was sentenced Tuesday to 7 ½ years in prison on fraud and campaign-finance charges https://lnkd.in/g4USb7u2 #FTX #crypto #cryptofraud #cryptoscams #fraud #financialcrime #SBF #bankmanfried #campaign #politics #USA #bahama #bitcoin #cryptocurrency #blockchaim #digital #compliance #regulations

Former #FTX CEO, Sam Bankman-Fried, sentenced to 25 years in prison amidst speculation of a 110-year sentence. The verdict follows the collapse of FTX, once valued at over $30 billion. Learn more 👉🔗 https://lnkd.in/geazBkbp #Cryptotale #CryptoNews #SamBankmanFried #SBF #SBFTrial

A US court has ruled that the bankrupt cryptocurrency exchange FTX must pay $12.7 billion to compensate customers and fraud victims In a significant legal development, the US court has ruled that the bankrupt cryptocurrency exchange FTX must pay $12.7 billion (£9.9 billion) to compensate customers and fraud victims. This decision comes five months after FTX’s founder, Sam Bankman-Fried, was jailed for his role in the company’s collapse. The Commodity Futures Trading Commission (CFTC) hails this recovery as the largest in its history, aiming to restore funds to those affected by the “massive fraudulent scheme” orchestrated by Bankman-Fried and a core group of FTX insiders, according to The Guardian. https://lnkd.in/ebRmY55T FTX, which was once valued at $32 billion, faced financial turmoil in late 2022 due to a crypto price crash. Bankman-Fried’s conviction on charges of fraud and conspiracy to launder money led to a 25-year prison sentence and an order to forfeit $11 billion in assets. https://bit.ly/4aadfWP Notably, FTX had utilized customer funds for risky investments through its closely associated hedge fund, Alameda Research. Bankman-Fried himself diverted customer money for personal purposes, including political donations, luxury cars, and properties in the Bahamas, even garnering endorsements from A-list celebrities. The CFTC emphasizes that FTX lacked essential regulatory safeguards, such as governance, customer protections, and surveillance, which could have prevented its collapse. The court’s compensation order concludes a nearly two-year legal battle initiated by the CFTC in December 20221. “FTX used age-old tactics to create an illusion that it was a safe and secure place to access crypto markets,” the CFTC chair, Rostin Behnam, said, according to The Guardian. “But the basic regulatory tools, like governance, customer protections, and surveillance that exist to identify misconduct and ultimately prevent collapse, were simply not there.” The latest compensation order by the US district court for the southern district of New York ends a near two-year legal case filed by the CFTC in December 2022. Picture credit: thecoinrise #sambankmanfried #ftx #fraud #legal #compensation