Crypto reformed? Bankman-Fried is going to jail but there'll be others

There is a palpable feeling of relief in the cryptocurrency sector. Evangelists are preaching the good news that the industry has been purged of bad actors like Sam Bankman-Fried of collapsed crypto exchange FTX, Alex Mashinsky of bankrupt lending platform Celsius, Do Kwon of failed stablecoin Terra and Changpeng Zhao, disgraced former CEO of exchange Binance.

- Molly White

They proclaim that crypto can finally ascend from its purgatorial, "wild west" days to become a respectable part of the financial world blessed by regulators. That exultant attitude has contributed to surging cryptocurrency prices, with bitcoin surpassing a previous all-time high in the weeks leading up to yesterday's sentencing of Bankman-Fried.

This relief appears to be unjustified, as is the faith that the cryptocurrency industry will get better and be different. Since the former FTX boss's conviction, there have been no changes that would prevent a new crypto mania just as devastating as the last.

Bankman-Fried, who also co-founded FTX's sister hedge fund Alameda Research, was convicted last November on seven charges of fraud and conspiracy.

His investigation and trial helped to shine a light on the shady workings of an industry that has largely evaded regulation.

Although FTX's business practices have shocked those who are used to the more heavily regulated world of traditional finance, trial testimony and bankruptcy filings - along with similar filings from other failed crypto ventures - have highlighted that what happened at FTX is business as usual in the sector.

FTX and Alameda Research were operated by the same people, even working out of the same office, despite the clear conflicts of interest from sharing the roles of exchange, market maker and asset custodian. Customer funds that were meant to be safeguarded were instead pooled with corporate assets and then spent with reckless abandon on everything from Bahamian real estate to Super Bowl adverts and investments in companies operated by friends.