- The criminal trial against Sam Bankman-Fried is coming to a close.
- Users are flocking to guess his fate on blockchain-based prediction markets like Polymarket, where users bet on binary outcomes.
- Manifold Markets’ co-founder explains the “wisdom of the crowds effect.”
Online punters put slim chances on Sam Bankman-Fried avoiding jail time.
That’s according to Polymarket, a blockchain-based betting site that allows users to speculate on events with binary outcomes.
Similarly, forecasting startup Manifold has put the odds of the FTX founder being convicted of a felony before 2026 at 95%.
Bettors’ certainty comes as legal teams wrap up their arguments at Bankman-Fried’s trial.
For the past five weeks, jurors have heard about the former crypto wunderkind’s role in the collapse of FTX, the exchange he founded in 2019.
Following three days of Bankman-Fried testifying in a last-ditch effort to strengthen the defence — which boils down to his argument that he didn’t knowingly run a fraud, he was only incompetent — the jury is set to deliberate his guilt.
Bankman-Fried faces seven charges, including conspiracy to commit fraud and money laundering. He has pleaded not guilty.
If found guilty, Bankman-Fried could face a lifetime in jail — although Polymarket has put the odds of that at a mere 5%.
Neither Polymarket nor Manifold refer to themselves as betting sites, but as prediction markets where users can “profit from the things you know best,” as Polymarket puts it.
These online markets allow users to wager on any topic, with the hope that it could also produce meaningful insights on current events.
“We have 50,000 users that both create and bet on markets,” James Grugett, co-founder of Manifold Markets, told DL News. “The probability is determined by how much users are betting on Yes or No. They are trading shares, like in a stock market, trying to make a profit, which leads to a wisdom of the crowds effect.”
Polymarket’s odds work in a similar manner.
At Manifold, users can only place bets with its play-money Mana that “cannot be exchanged for real dollars,” Grugett said.
Users can either convert Mana into charity donations or use them to make future bets.
On Polymarket, users make their bets in USDC, according to its website.
Polymarket has been quick to create markets and bets on things, even if the windows towards their resolution are slim on time or offer no hope of a final resolution.
That, industry watchers say, is because of the site’s unregulated nature: it does not fall neatly under the purview of a single regulatory agency.
“That might give them a bit more licence to do whatever they want, such as create a bet on the outcome of a court case,” Matthew Shaddick, formerly head of political markets at UK-based betting exchange Smarkets, told DL News back in February.
“Most regulated betting sites wouldn’t touch those sorts of things, or anything to do with the legal process.”
The Commodity Futures Trading Commission fined Polymarket $1.4 million in 2022, accusing it of allowing people to make bets without being registered. The regulator settled the charges at the same time.
Polymarket has since blocked US citizens from accessing the site.
Polymarket did not return a request for comment.
Not just betting sites
It is not just betting sites that suggest Bankman-Fried’s chances of avoiding the slammer are slim.
In the fiscal year 2022, there were almost 72,000 federal criminal cases in the US, according to data analysed by the Pew Research Center.
Of those cases, only 290 — or 0.4% — went to trial and were acquitted and another 1,379 went to trial and were found guilty.
However, about nine in 10 defendants pleaded guilty and didn’t go to trial at all and only 8.2% had their cases dismissed.
Eric Johansson is DL News’ London-based news editor. Got a tip on this or another story? Email him at email@example.com.