SINGAPORE – Sam Bankman-Fried’s conviction for a massive fraud at the FTX exchange raises a deceptively simple question: What is next for crypto?

The former billionaire was a vocal champion of the industry but now faces decades in jail, a fall that is emblematic of the boom and bust in the digital asset market over the past 2½ years.

For some in crypto, his conviction on seven counts of fraud and conspiracy points to the end of an era of risky and wrongful practices, and a more regulated future of wider adoption of digital assets and blockchain technology.

Others outside the industry are taking a much tougher line, arguing that the verdict confirms crypto as a sector riven with weaknesses that attract criminals, hackers and rogue states.

Crypto markets dipped after the verdict, but the losses were mostly contained.

Bitcoin – up more than 100 per cent in 2023 following a US$1.5 trillion (S$2 trillion) digital asset rout in 2022 – fell about 1 per cent to US$34,660 as at 10.46am in Singapore on Friday.

Here are some reactions to the jury verdict:

‘End of an era’

“The guilty charges in the FTX case mark the end of an era,” said Mr Brian Mosoff, chief executive of Ether Capital, which invests in crypto and blockchain projects.

“The days of Wild West exchanges, scammy assets, fraud and an industry living off in the corner of the Internet are over. Success, fame and money were the early-in-the-story words to describe Sam’s empire, but the final will be deception, fraud and justice,” he said.

Mr Paul Veradittakit, managing partner at venture capital company Pantera Capital, said: “We have to learn and move on.”

He added that “regulatory clarity is needed and helpful to prevent these situations”.

“Diligence in crypto continues to evolve in the space, and I’m sure it has evolved with this current market,” Mr Veradittakit said.

Ms Angelina Kwan, CEO of regulatory consultancy Stratford Finance, said: “It’s a watershed moment that reinforces again that crime does not pay in the digital asset space and there is enforcement, which should reassure investors and traders that the industry is maturing.”

She added: “We will look back at this moment and say this was the first step out of the crypto winter that the demise of FTX contributed to.”

Industry condemned

“FTX and Sam Bankman-Fried are not one-offs in the crypto industry,” said Mr Dennis Kelleher, co-founder of Better Markets.

“In fact, today’s conviction is a condemnation of the entire crypto industry and its business model, which is based on breaking the law for a financial product that has no socially useful purpose.

“It is just the opposite: Crypto’s use and value is in breaking the law, from ripping off customers, money laundering and tax evasion to ransomware, gambling and funding terrorists and rogue states like Hamas, North Korea and Iran,” he said.

Painful lesson

“This is an important disruption in our financial system,” said Duke University finance professor Campbell Harvey, referring to crypto and blockchain technology.

“Part of the process includes learning from the failure. There are painful lessons. However, the system becomes stronger after these failures.

“We learn, often the hard way, but we learn. We need to always think about the big picture: Improving our financial system, which leads to financial democracy and increased economic growth,” said Prof Harvey. BLOOMBERG