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The crypto industry wants to move past FTX. Can it?

SCOTT SIMON, HOST:

One year ago today, the cryptocurrency exchange FTX filed for bankruptcy. Now its founder, 31-year-old Sam Bankman-Fried, could spend the rest of his life in prison. This is a double blow that threatens the very future of crypto. NPR's David Gura joins us. David, thanks so much for being with us.

DAVID GURA, BYLINE: Thanks for having me, Scott.

SIMON: A jury found Sam Bankman-Fried guilty of securities fraud and money laundering. How's the crypto industry taking it?

GURA: Well, of course, thousands of FTX customers lost billions of dollars in this fraud. A lot of them bought cryptocurrency during the pandemic, Scott, when it was seen as the next big thing. The people who represent other crypto companies now want to distance themselves from FTX and from Sam Bankman-Fried, as you might imagine. Kristin Smith heads a trade group called the Blockchain Association. She is one of them. And in a statement, she told me this trial was about a crook, not crypto. But that message may not get through to individual investors who still feel burned by what happened at FTX, according to Yesha Yadav. She's an expert on crypto law at Vanderbilt.

YESHA YADAV: It's been hard for the industry to really disassociate itself completely from FTX and, you know, put that as an isolated incident.

GURA: And that's because FTX and Sam Bankman-Fried were such big players in the world of crypto. They spent big money, real dollars on a Super Bowl ad with Larry David, on endorsement deals with Tom Brady and Steph Curry, all with this goal, Scott, of making FTX a household name and to make cryptocurrency popular.

SIMON: Has the federal government taken a stronger action against crypto since FTX blew up?

GURA: Well, we have seen financial regulators like the SEC go after other crypto exchanges and go after celebrities who promoted cryptocurrencies, and one reason they're doing this is they have gotten tired of waiting for Congress to act. There were hearings after FTX filed for bankruptcy. We've seen draft legislation. But lawmakers still have not passed anything substantial related to crypto. And, Scott, the odds of that happening, as you might expect, are only going to diminish as we get closer and closer to the next election.

SIMON: Is crypto hot anymore?

GURA: Not as hot as it was. You know, as FTX teetered on the brink, we saw this dramatic downturn in cryptocurrency prices. It deepened. Bitcoin fell to around $15,000 from an all-time high of around $65,000 in what was called a crypto winter. And this isn't surprising given how much money FTX customers lost. You know, something individual investors lost is their appetite for risk. But in the last few months, we have seen signs that the market is starting to thaw. So far this year, bitcoin's price has more than doubled, so it may not be as hot as it once was, but this is a market that it seems is starting to bounce back.

SIMON: So there is a future for crypto.

GURA: Some of the wild speculation that was a hallmark of the crypto market during FTX's heyday has gone away, according to Timothy Massad. He's a former regulator. He ran the Commodity Futures Trading Commission. But Massad, who is now researching crypto at Harvard, says he is still not completely convinced of its viability given what he's seen so far.

TIMOTHY MASSAD: I don't think the use case for a lot of what's been developed in this sector has really been proven.

GURA: He hasn't seen applications for how it might work in the real world. Now, companies and investors are focusing on how the technology behind cryptocurrencies can be applied to various industries like health care and insurance. And there are still individual investors who want to buy and sell crypto. Fidelity recently made it possible for people to put bitcoin in their retirement portfolios, and several big money managers, including BlackRock, want the government to approve a security that would track the price of bitcoin, which would widen that cryptocurrency's appeal even more. Last thing here, Scott - I want to go back to FTX. You know, believe it or not, even it is on the verge of some kind of comeback. The Wall Street Journal reporting this week - three companies want to buy FTX. They hope to reboot that cryptocurrency exchange.

SIMON: NPR's David Gura, thanks so much.

GURA: Thank you.

(SOUNDBITE OF MUSIC) Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

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David Gura
Based in New York, David Gura is a correspondent on NPR's business desk. His stories are broadcast on NPR's newsmagazines, All Things Considered, Morning Edition and Weekend Edition, and he regularly guest hosts 1A, a co-production of NPR and WAMU.
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