When it comes to financial justice, no perpetrator wants to find themselves before an American judge.
As the guardians of free market capitalism, the courts in the US regard white-collar crime with the same solemnity as other misdemeanours and sentence severely.
FTX’s youthful founder Sam Bankman-Fried finds himself up there in the pantheon of great US fraudsters, along with Bernie Ebbers, the chief executive of Worldcom and Dennis Kozlowski of Tyco, both of whom received 25-year sentences.
Only the late Bernie Madoff, sentenced to an astonishing 150 years, received a greater stretch.
Crypto bubble: Bitcoin reached a new peak price of $71,419 earlier this month (MARCH) almost doubling from its price in July 2021.
The Holocaust survivor, writer and Nobel prize winner Elie Wiesel, who was among Madoff’s victims, said at the time the greatest punishment for Madoff would be to sit in his cell with a perpetual relay of pictures of his victims.
Maybe Bankman-Fried should be provided a similar punishment.
The difference is that in the shadowy, mysterious world of cryptocurrency, there is so much anonymity that no one really knows who they are dealing with.
That is why bitcoin and other cryptos are the favoured means of exchange of terrorist groups including Hamas and Isis.
It took the events of October 7 in Israel to galvanise the US Department of Justice and the Israeli authorities into closing down crypto wallets.
In addition to his 25-year sentence Bankman-Fried has a world-class bill to settle. Judge Lewis Kaplan imposed $11billion (£8.6billion) of financial penalties.
That places the $355million (£277million) civil fine levied on Donald Trump, for inflating the value of his assets to obtain loans from his bankers, in perspective.
Judge Kaplan was unimpressed with Bankman-Fried’s claims that FTX customers and creditors would be paid in full.
He compared the mop-haired millennial to a thief who takes his loot to Las Vegas, successfully bets the stolen cash, and then asks for an easier sentence because he might be able to use his gambling winnings to pay back victims.
Bankman-Fried enjoyed a lavish lifestyle in the Caribbean, was courted by heads of state and gave enormous sums to Democratic candidates. He vowed to use his wealth to better humanity.
Other convicted cheats, such as the insider trader Ivan Boesky (whose trial I covered in 1987) tried the same tactic, giving tens of millions away to universities.
When he was sent down for five years, his name was torn down from the endowed buildings.
What is most troubling about Bankman-Fried and the skulduggery uncovered at Binance, resulting in a $4billion (£3.15million) fine for boss Changpeng Zhao, is the lack of discipline it has brought to Wild West crypto markets.
Quite the opposite. Bitcoin reached a new peak of $71,419 this month, almost doubling from its price in July 2021.
The reluctant decision of the US regulator, the Securities and Exchange Commission, to authorise exchange traded funds (ETFs) holding crypto gave a lease of life to an asset class favoured by crooks, terrorists and uninitiated speculators.
Their holdings have transmogrified into great wealth. It is unbelievable that financial markets, there to provide capital and liquidity to respectable traded companies, should allow interlopers.
There is no question that eventually, when central banks get their act together, government-backed digital currency will become a factor. It may even change the architecture of banking as we know it.
No one should begin to think that bitcoin and its ilk have any intrinsic value.
The process of mining and creation are shrouded in fantasy. The algorithms used to create them consume vast quantities of energy in a world where investment is often judged on climate change values.
As the Bankman-Fried case shows, unregulated crypto assets, run from sun-drenched offshore islands, are an invitation to fraudulent behaviour.
Fortunes may have been made by those with the good sense to sell on the way up and transfer winnings into fiat currencies.
No one should expect sympathy or compensation when the crypto bubble bursts… as it surely will.
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