‘Paper Empire’ tv show creator Robert Gillings has opened up on the ongoing trial of Sam Bankman-Fried, the founder of crypto exchange FTX.
The trial, which began on October 3, is expected to last about six weeks. Bankman-Fried faces seven counts of fraud and conspiracy, including wire fraud and securities fraud. According to prosecutors, he stole billions from FTX customer funds for his own use and to cover significant losses suffered by his cryptocurrency hedge fund, Alameda Research. They also accuse him of deceiving FTX investors by hiding the scheme.
Bankman-Fried’s ex-girlfriend, Caroline Ellison, who used to be the CEO of Alameda Research, pointed out that he had big ambitions. She remembered him saying he might have a 5% shot at being the US president.
Comparing such a massive alleged fraud to actual events is challenging; it feels more at home in the narratives of cryptocurrency scam-themed movies and TV series.
It’s apparent that Robert Gillings’ show, Paper Empire, aligns with this real-life scenario in several ways.
Paper Empire follows crypto into its dark universe. The show is about Laurence Fintch’s (played by Robert Davi) deceptive goal to be the planet’s financial savior with his “Digital Limbo”, a virtual cryptocurrency technology. Fintch’s ambition, vision, and maneuvers are very similar to Bankman-Fried’s.
“The Sam Bankman Fried case is not a trial against crypto; it’s a case against fraud in a crypto casino”, said the show’s producer and director, Gillings, when asked about the FTX case, calling it “Tales from the Crypt-O”.
Prior to its bankruptcy in November last year, FTX offered derivatives, options, tokenized stocks, leveraged tokens, and an NFT marketplace. It had also launched its own utility token, FTT, which is still available for trading.
Public faith in the cryptocurrency sector has taken a sizable hit with FTX’s collapse. Billions of dollars are reportedly fleeing Binance, the world’s leading crypto exchange, while experts debate the possibility of a digital asset “dot-com crash”.
As history suggests, the downfall of one big thing can indeed have a domino effect on the entire industry. Although not precisely relevant to the ongoing scenario, the collapse of major financial institutions such as Lehman Brothers, for example, triggered a global financial crisis in 2008. It remains to be seen whether other exchanges will be affected profoundly by this event or if it will lead to increased regulation in the crypto industry. The trial’s verdict could prove pivotal in multiple respects.
In the context of crypto regulation, Gillings argues that it is not possible to regulate through enforcement after the fact or through victim impact statements. He suggests that defining digital assets is the first and foremost step in regulating them.
“Some say it’s a security, unregistered or not security. Or a commodity, others believe it’s a currency, even property. All the above all are regulated differently.”, Gillings says.
“Define it, then you can regulate it”, he emphasizes.
The collapse of FTX has led to a push for more regulation of stablecoins. According to sources, Congress is in the process of considering important bills that aim to establish industry-favored regulations. Nonetheless, there are lawmakers who are advocating for stricter measures against financial crimes involving digital currency.
As Robert Gillings puts it, “What’s needed and hopefully this trial sparks is the creation of real bills to pass through Congress that can successfully regulate and provide structure and safety to the public.”
Bankman-Fried pleads not guilty to all charges, claiming FTX mistakes, no intent to steal funds. A conviction could lead to decades in prison.
His net worth was estimated to be $32 billion when the crypto businesses collapsed.