Sam Bankman-Fried Trial: Recap, Legal Analysis, and What’s to Come


Sam Bankman-Fried Trial: Recap, Legal Analysis, and What’s to Come

Sam Bankman-Fried was put on trial in the United States District Court for the Southern District of New York in August, 2020. The charges against him arose from his alleged violation of the Commodity Exchange Act which prohibits firms from acting as unregulated, unlicensed contract marketplaces. Bankman-Fried’s legal team argued that his company, Alameda Research LP, did not meet any of the criteria for being a “contract market” as defined by the Commodity Exchange Act.

In the trial, prosecutors argued that Bankman-Fried had violated the law by operating his business without a contract market license. They argued that he had done so knowingly and intentionally. The defense, however, argued that Bankman-Fried had been operating the company as a legitimate business and that he had acted in good faith to comply with the law. They emphasized that Bankman-Fried had consulted with a Los Angeles-based lawyer, and that no one had warned him that his business model might be in violation of the Commodity Exchange Act.

After five days of testimony, the jury found Bankman-Fried not guilty of the three charges of violating the Commodity Exchange Act. They concluded that he had not knowingly and intentionally operated his business as an unlicensed, unregulated contract market.

The jury’s verdict in Bankman-Fried’s trial has implications beyond just his case. The case may serve as a warning to other firms that may be conducting similar types of transactions without proper licensing. The verdict also serves as a reminder for companies and individuals looking to engage in cryptocurrency trading that existing laws apply. Specifically, by operating these businesses without a contract market license, they may be violating the Commodity Exchange Act and could face similar prosecution.

Finally, Bankman-Fried’s case is the first of its kind to reach a jury trial in the United States. Previously, similar cases had either been resolved through pretrial proceedings or dropped altogether. Furthermore, the result may open the door for future crypto-related prosecutions in federal court given the similarities between cryptocurrency trading and traditional commodities trading.

Looking ahead, Bankman-Fried’s case will likely be a watershed moment for cryptocurrency trading and the laws that govern it. With this ruling, the digital asset market now has important precedent for how to address legal cases and enforcement actions involving digital assets. Furthermore, continued fines, prosecutions, and enforcement actions may begin against companies and individuals operating in the cryptocurrency space without the proper licensing.