The trial against former crypto billionaire Sam Bankman-Fried officially started on Tuesday.
The 31-year-old founder of collapsed crypto exchange FTX is being accused of a slew of charges related to an alleged multi-billion dollar cryptocurrency fraud.
As jury selection begins, the world of crypto awaits the development of a trial that could shape the face of crypto regulation for years to come.
Bankman-Fried’s trial comes ahead of Benzinga’s Future of Digital Assets conference on Nov. 14 in NYC, where experts will delve into the evolving landscape of the crypto industry.
The jury’s decision and Bankman-Fried’s potential conviction are expected to resonate heavily in Washington, D.C., where a number of crypto-related pieces of legislation are being discussed.
Before the fall of FTX, which dragged the entire crypto market down to two-year lows, Bankman-Fried was a well known name in Washington.
“I really deeply wish that I had taken like a lot more responsibility for understanding what the details were of what was going on there,” said Bankman-Fried in an interview with ABC’s Stephanopoulos in November. “A lot of people got hurt, and that’s on me.”
Federal records reviewed by the Washington Post put Bankman-Fried’s donation for the last political cycle alone at $40 million, mainly supporting causes aligned with Democrats. This level of donation puts the fallen entrepreneur only behind George Soros in the list of top political donors.
Among the charges Bankman-Fried is facing are accusations of $100 million in stolen FTX deposits to fund political operations. Several Democratic politicians turned down money coming from Bankman-Fried’s accounts after the FTX story became known.
Bankman-Fried campaigned for regulatory oversight and consumer protection. Now, a number of Republican lawmakers are pushing for some of these regulations.
Before the August recess, Congress presented a number of bills aimed at regulating the cryptocurrency market. A key package within the proposals is expected to define which governmental agency should be in charge of overseeing the crypto market: the Securities and Exchange Commission or the Commodity Futures Trading Commission.
For years, the federal government has been trying to regulate the crypto market, which is by definition decentralized and hard to oversee.
The SEC has put in place several pieces of regulation aimed at keeping the crypto markets in check, which were severely criticized by industry leaders. A big problem with the current state of affairs is that the SEC is handling crypto with rules and definitions made for traditional securities. The issue of whether cryptocurrencies are securities continues to be debated among financial economists.
After the controversial FTX debacle, which financially hurt thousands of investors, and lacking effective legislation from Congress, the SEC began operating under the definition that all forms of digital assets are securities and thus should fall under their jurisdiction.
The agency launched a crackdown of major crypto exchanges and companies, including Binance and Coinbase Global Inc (NASDAQ:COIN).
A set of new bills proposed by House Republicans, with some bipartisan support, would limit the reach of the SEC on cryptocurrencies, granting oversight responsibility to the Commodity Futures Trading Commission for most cryptocurrencies.
The bills are expected to come to a vote this fall, and they also encompass regulation for stablecoins, whose proliferation is causing fears of an erosion of the government’s ability to steer the economy through monetary policy. The legislation aims to establish criteria for entities permitted to issue stablecoins and to regulate their redeemability and collateral management.
Yet at the same time a group of Democratic senators, including prominent Elizabeth Warren (D-MA), are pushing for a separate set of bills that aim at a crack-down on money-laundering and sanctions abuses in crypto, by extending anti-money-laundering requirements to digital wallet providers, crypto miners, validators and other members of the crypto network.
“Sam Bankman-Fried’s trial will remind everyone in Congress about the risks that an unregulated crypto industry poses for all of our constituents, for our economy and for international stability,” said Warren in her interview with Politico.
The trial of the former FTX CEO began on Tuesday as the disgraced crypto mogul is facing charges of fraud.
Produced in association with Benzinga
