So Long, SBF

Ending this painful chapter in crypto.
Nov 2, 20233 min read
I just recorded this as the opener for the Bankless Rollup tomorrow, here it is in written form:

On Thursday evening, November 2nd, Sam Bankman-Fried was found guilty by the jury of all charges. That's all seven counts.

We recorded this rollup before the verdict dropped – David is in Europe, likely asleep, so we haven't been able to talk about this, but I'm sure I speak for him when I say... it feels good to end this painful chapter in crypto.

One year and five days ago, we hosted SBF on our podcast to debate Erik Voorhees on crypto regulation. We arranged this debate after we'd heard through friends that SBF was up to mischief in DC – greasing the pocket of lawmakers and working with them on a bill that would make DeFi front-ends illegal. He was effectively pulling up the ladder for decentralized finance and accruing power to his exchange FTX and doing all this under the auspice of practicality.

The podcast struck some odd tones – at times, he was almost lecturing. We crypto natives didn't understand how to work with governments. Our values weren't practical... couldn't win... were too rigid. Here was a billionaire wunderkind who built one of the world's top startups in less than four years, and what did we know about building business and getting things done in DC?

I remember Erik Voorhees eviscerating his arguments with monkish precision.

Crypto is an open, permissionless financial system for the world, Erik said – like the internet, like email. A society that rejects this technology is a society that rejects fundamental freedom. The moral clarity pierced through the bullshit like a knife through butter.

David and I watched as SBF absolutely withered under this reproach.

It was clear to me then that crypto had made a grave mistake in entrusting so much to people like Sam, who didn't share our values and were happy to trade them off in some calculated game of maximum EV.

What we didn't know at the time was that SBF was covering up the biggest fraud since Bernie Madoff. By that point in October of 2022, he had gambled away over $8 billion in customer funds... he must have been hoping for some way to last long enough to win it all back.

Eleven days later, it would all start to come crashing down.

I still have no idea why he came to that debate.

I think it was the spark that took him down. He must regret it now because in the the hours and days after the debate the crypto community quickly turned on him – there was a sense of betrayal - high alert - and it didn't take us long to sniff out the truth of his fraud—credit to @CoinDesk for breaking the story of the Alameda Balance Sheet.

Today, SBF was declared guilty in a US court of law after hurting many people and doing incredible damage to an industry I love. I'm thankful we have a legal consensus process in the US that afforded a fair trial and due process.

I'm thankful justice has been served.

The values of SBF...and many of those like him in 2022...were a stage 3 cancer, and we cut them out. If they persisted much longer, it could have been terminal. I'm thankful to the bear market for giving us this opportunity.

Criminals and scammers will visit our industry again in the future. I hope those of us who lived through SBF will be wiser the next time.

But above all, let's make sure we remember that the true hope of crypto isn't another set of bankers like SBF. 

It's decentralized finance. Holding our own private keys. Running our validators. It's ethereum. It's bitcoin. This is the real revolution, and it's just getting started.

Protocols, not people.

Code, not kings.

Let's get back to going bankless.

Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.

Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here.

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