What Will Crypto Industry Make of Sam Bankman-Fried's Sentence?

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As SBF received 25-year sentence, impact of FTX fall is yet to come

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During the trial, three former close associates testified against Bankman-Fried, alleging that he directed them to use FTX funds for various purposes, including paying Alameda's debts, making political donations and acquiring luxury real estate in the Bahamas. They confessed to fraud and are awaiting sentencing.FTX, once valued at $32 billion, collapsed in late 2022, filing for bankruptcy amid a broader cryptocurrency crash.

Bankman-Fried is not the only crypto figure facing legal woes. Recently, Terraform Labs and its former CEO Do Kwon were held accountable for fraud in a New York City case, with Kwon detained in Montenegro since early last year.In a few day period, there was a historic crash--over 50% in most correlated assets, with no bid side liquidity.Changpeng Zhao, former CEO of Binance, faces sentencing in late April for failing to enforce anti-money laundering protocols at his company.

The fallout from FTX's collapse extended beyond financial losses, tarnishing the reputations of notable figures associated with FTX. This event triggered a chain reaction of crypto failures within the industry, from which it has yet to fully recover. Additionally, the incident prompted regulatory scrutiny and dampened public sentiment toward cryptocurrencies at a crucial time when the asset class was gaining mainstream acceptance.

Alameda Research was heavily backed by FTT tokens, operating under the assumption that FTT prices would remain stable and clients would not withdraw from FTX. The problem was not that FTX customers and investors trusted SBF and his partners without verification — they simply did not care at the time.following the FTX situation:"The alleged fraud committed by Mr. Bankman-Fried is a wake-up call to crypto platforms that they must comply with our laws.

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