On December 13, 2022, Samuel Bankman-Fried, founder and CEO of international cryptocurrency exchange FTX, was charged with two counts of wire fraud conspiracy, two counts of wire fraud, and one count of conspiracy to commit money laundering. Last week, Bankman-Fried, referred to colloquially as “SBF,” was sentenced to 25 years in prison and ordered to repay more than $11 billion.
A lot has happened in the world of cryptocurrencies between that December indictment and SBF’s sentencing. Here are five things that took place in the world of crypto between that day and this one.
Bitcoin Boomed
By the time Bankman-Fried was charged in December of 2022, the price of bitcoin had been in a dizzying plunge for nearly a year. Topping out at just over $59,700 in November 2021, bitcoin was trading at $16,700 by mid-December of the following year.
Since then, cryptocurrencies in general and bitcoin in specific, have been on a tear. Bitcoin is up nearly 3x from those mid-December lows, trading north of $66,000. Ethereum is up 2.8x from its December lows.
Observers believe that the current boom in cryptocurrencies is different from the previous boom which in many ways put crypto on the cultural map. Part of this has to do with the “cleaning out” of bad actors such as SBF (and others), as well as growing regulatory consideration of the legitimate goals of the good ones. And while this sometimes has contributed to its share of headaches, it has also led to one of the most promising developments in crypto: the launch of spot bitcoin ETFs.
The Spot ETFs are Here!
One of the most anticipated developments in the cryptocurrency space was the launch of U.S. spot bitcoin ETFs. And within a month of Bankman-Fried’s charging, those spot bitcoin ETFs arrived.
As we reported in Tales from the Crypto in January, the U.S. Securities and Exchange Commission approved of eleven spot bitcoin exchange-traded funds. The ETFs were an immediate hit; digital asset manager CoinShares noted that more than $870 million poured into the new funds in the first three days. And like the underlying asset they track (and track better than previous bitcoin ETFs that were based on bitcoin derivative holdings), these funds have soared in the weeks and months since inception.
Crypto Crime Collapses
“Collapse” may be a bit strong, but “2023 saw a significant drop in value received by illicit cryptocurrency addresses,” according to a report issued earlier this year by Chainalysis. The report – 2024 Crypto Crime Trends – noted that from a high of $39.6 billion in 2022, the total cryptocurrency value received by illicit cryptocurrency addresses dropped to $24.2 billion in 2024, just a little over 2021’s $23.2 billion mark. The report also showed a decline in the illicit share of all cryptocurrency transaction volume from 0.42% in 2022 to 0.34% in 2023. A decline in both crypto scamming and hacking revenue in 2023 was also reported.
It’s still a dangerous world out there. The Chainalysis report also showed a rise in ransomware and darknet market activity and expressed particular concern about the former. “The growth of ransomware revenue is disappointing following the sharp declines we covered last year,” the report reads, “and suggests that perhaps ransomware attackers have adjusted to organizations’ cybersecurity improvements.” The report links to its previous reporting on this trend.
More Crypto Indictments
SBF was not the only crypto entrepreneur to run afoul of the law over the past year and half since his arrest in late 2022. Alex Mashinsky, co-founder and former CEO of cryptocurrency lending platform, Celsius Network, was indicted and arrested in July of 2023 on charges of fraud and market manipulation. Mashinsky’s arrest followed a civil lawsuit filed against him by the Attorney General of New York accusing him of securities fraud while serving as Celsius CEO. The SEC has also charged Mashinsky with violating Federal security laws. Mashinsky has pled not guilty to the criminal charges.
Changpeng Zhao, co-founder and former CEO of cryptocurrency exchange giant Binance, was another high-profile player in the crypto space who ran into major legal issues in 2023. Zhao launched Binance in 2017 and, within eight months, grew the company into the largest cryptocurrency exchange in the world by trading volume. Because of this, however, regulators began to pay closer attention to Zhao and Binance and, by 2023, the scrutiny had yielded consequences. In June, the SEC sued him and his exchange for violations of U.S. securities rules. By November, Zhao had agreed to resign from Binance and pay a fine of $50 million as part of his guilty plea. The exchange also pled guilty and paid $4.3 billion in fines.
Ripple Wins and Loses Against SEC on XRP
While the time between December 2022 and March 2024 represented in many instances the correcting hand of authority putting some restraint on the industry, there were some instances in which it was authority that found itself restrained. In July of last year, for example, a Federal judge sided with Ripple in its argument against the Securities and Exchange Commission with regard to the status of its token XRP. The SEC had argued that XRP was a security and thus subject to its jurisdiction. Ripple, on the other hand, contended that XRP was not a security when sold on the open market via crypto exchanges.
Unfortunately for Ripple, the judge also ruled that Ripple’s institutional sales of XRP did represent unregistered securities offerings. And this week we learned the extent of the punishment the SEC wants to mete out for this offense: $1.95 billion. In a statement on X, Ripple CEO Brad Garlinghouse was unequivocal in his opinion on what the SEC is asking for:
“The SEC plans to ask the judge for $2B in a case that involved no allegations (let alone findings) of fraud or recklessness,” Garlinghouse wrote. “There is absolutely no precedent for this. We will continue to expose the SEC for what they are when we respond to this.”