What happened to FTX?
Sam Bankman-Fried started his Cryptocurrency journey in his early 20s and soon became one of the biggest names in the crypto world. At age 25 he branched out and founded the crypto hedge fund (A hedge fund that invests in cryptocurrencies and crypto-based products) Alameda Research. This creation came about after Bankman-Fried earned large sums of money by buying Bitcoin in the USA and selling it at an increased price in Japan.
After this creation, the founder relocated to Hong Kong in 2018, where he shortly founded FTX in 2019, and subsequently relocated again to The Bahamas in 2021. It was here where Bankman-Fried began his successes, welcoming celebrities to crypto conferences, and saw FTX become the second-largest crypto exchange in the world.
At one point, his net worth was an estimated $26billion (£21.3billion).
It wasn’t until the start of November 2022 that the unravelling would begin. A report in Coindesk suggested that two elements of Bankman-Fried’s crypto worlds, Alameda and FTX were ‘unusually close’. The website got hold of a balance sheet that demonstrated the foundations of Alameda’s values, which suggested that it was largely ‘made up of a coin that a sister company invented.’ Here was where it quickly went downhill for the young billionaire.
Investors quickly left the FTX creator’s cryptocurrency universe, and ultimately caused his net worth to decrease by $15 billion (£12.3billion) in a single day.
On November 12th, 2022, FTX Trading and Alameda Research were placed into bankruptcy, which saw Bankman-Fried resign as CEO.
The arrest
The evening of December 12th saw the ex-CEO arrested in his apartment complex in an Albany Resort in The Bahamas.
He was the only person charged in the indictment and was taken into custody by Bahamian authorities.
He faces extradition to the US to face his charges that have a value of $1.8billion (£1.4billion)
The first hearing
Sam Bankman-Fried faced a federal court in Manhattan on January 3rd, where he pleaded not guilty to all 8 charges.
These charges included wire fraud, wire fraud conspiracy, money laundering, conspiracy to commit money laundering, conspiracy to defraud the United States and campaign finance regulations, securities fraud, conspiracy to commit securities fraud and conspiracy to commit commodities.
Prosecutors are claiming he ‘engaged in a scheme to defraud customers of FTX.com by misusing the customers’ deposits, and instead, using them to pay debts of Alameda Research.
Bankman-Fried faces a maximum prison sentence of 115 years. His attorney, Mark Cohen, released a statement saying his client was ‘reviewing the charges…and considering all of his legal options’.
The future of Bankman-Fried
October 2nd 2023, has been set for the start of a four-week trial date.
The former FTX founder was granted a motion to withhold the names of the two co-signers for his, record breaking, $250million (£205 million) bail bond from the public. This comes after he claims his parents have already received online abuse.
Now under house arrest, Bankman-Fried has described his life as a ‘lonely daily routine’, and plays video games alone in fear of being identified online.
He claims to have not spoken to his ex-girlfriend and former CEO of Alameda Research, Caroline Ellison, or his FTX co-founder Gary Wang, but has said he ‘doesn’t blame people for wanting to try to avoid getting drawn in as best they can.’
We await his trial date this October to find out more details, as well as the outcome, of Bankman-Fried’s future.
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