It can go fast. Early last year, FTX founder Sam Bankman-Fried was still seen as a “king of cryptocurrencies” and a few months later his cryptocurrency exchange collapsed and he was arrested. Bankman-Fried will appear in court for the first time on Tuesday. Four questions about the case against the fallen “king of cryptocurrencies”.
Who will appear in court on Tuesday?
So this is Sam Bankman-Fried, or SBF as his fans call him. He is the founder of cryptocurrency exchange FTX and its subsidiary Alameda Research.
Bankman-Fried was seen as a child prodigy for years, as FTX became the second largest cryptocurrency exchange in the world during the cryptocurrency boom. Business magazine Forbes Bankman-Fried estimated his wealth at the end of 2021, when he was still 29, at $26.5 billion (€24.8 billion). He just says there now 1 ton have about.
How did he do?
Why FTX collapsed. Things went awry as there was growing uncertainty about the value of FTT, the crypto token of FTX. When that value dropped, concerns arose about liquidity issues at the cryptocurrency exchange. This caused another drop in value, which in turn led to panic among FTX customers. This resulted in a run on the banks, but on cryptocurrency exchange FTX.
Not long after, management – led by Bankman-Fried – decided to block further customer withdrawals. As a result, many investors no longer had access to their money. Eventually the debts could no longer be paid, Bankman-Fried resigned and FTX was declared bankrupt.
Why was Bankman-Fried arrested?
Because there was more than just a bank run. Bankman-Fried is accused, among other things, of misappropriating $10 billion in customer deposits. Those billions were funneled to the aforementioned subsidiary Alameda Research. Which in turn invested the money in all kinds of real estate, political campaigns and companies. At least $1 billion also disappeared, the news agency wrote Reuters.
Securities Regulator prosecutors speak of a “gigantic years-long fraud” orchestrated by Bankman-Fried. “He has used billions of dollars from his clients for his own good and for the growth of his crypto empire,” the SEC said in a statement. a declaration. In addition to potential fraud, the former “king of cryptocurrencies” is also accused of money laundering.
Two of his former partners, Caroline Ellison and Gary Wang, have since confessed to knowing about the fraud and deliberately misleading customers. “I know what I did was wrong,” FTX co-founder Wang said recently.
Meanwhile, a solution is still being sought for the millions of FTX customers who have lost money. There were also Dutch among them, although exact numbers are unknown. Additionally, FTX still owes major creditors at least $3 billion.
Bankman-Fried, now free again after posting bail, will appear in court for the first time on Tuesday. Unlike his former partners, he will plead his innocence there, she wrote The Wall Street Journal last week.
A real verdict will take months, if not years. If ultimately found guilty, Bankman-Fried faces a prison sentence of maximum 115 years wait.
