The Rise And The Fall of FTX’s Sam Bankman-Fried in simple terms

  /  Xapa News   /  The Rise And The Fall of FTX’s Sam Bankman-Fried in simple terms

Sam Bankman-Fried, a once prominent figure in the cryptocurrency world, is currently facing a trial for thirteen charges of fraud and conspiracy. These charges revolve around the alleged mishandling or unauthorized use of customers’ crypto holdings on the FTX exchange.

In 2017, he co-founded Alameda Research and later established the FTX cryptocurrency exchange in 2019. Bankman-Fried quickly became an icon in the crypto community and his influence extended even beyond the industry as he played a huge role in bringing mainstream attention to cryptocurrencies, even helping Super Bowl 2022 turn into the “Crypto Bull”. So what went wrong?

After leaving his job as a quantitative trader at Jane Street Capital In 2017, the 25-year old US-born Sam Bankman-Fried launched Alameda Research with Tara Mac Auley. Two years later, he partnered with a former Google employee, Gary Wang, and launched crypto exchange FTX, incorporated in Antigua and Barbuda, with its base of operations in the Bahamas. FTX launched the FTT token and closed an $8 billion seed round with funding from the likes of Binance, Binance Labs, Pantera Capital, Consensus Labs, Sequoia Capital, and Digital Currency Group in August.
In 2021, FTX became the world’s third-largest cryptocurrency exchange by volume traded as it gained over 1 million users and successfully secured an additional 900 million investment from 60 prominent investors. Soon FTX reaches a valuation of $32 billion, Bankman-Fried finds his luxury lifestyle and is listed as a Forbes billionaire for the first time, he is literally “saving” struggling crypto ventures from bankruptcy and everything is going just great for him until November 8, 2022 when customers request a combined $6 billion in withdrawals and withdrawals are halted!
Two days later, just as soon as the Securities and Exchange Commission and the US Justice Department started looking into the matter and began investigating FTX, Bankman-Fried stepped down from CEO and the exchange files for bankruptcy, with over $10 billion in FTX customer assets missing. He was finally found and arrested in the Bahamas on December 12, 2022, and was extradited to the US on December 21.
The allegations against Bankman-Fried involve the transfer of FTX customer funds to Alameda’s accounts to finance their activities, including high-risk trading. Furthermore, it is alleged that he gave permission to utilize billions of dollars from FTX to settle debts owed to external lenders, and there are also estimations suggesting that Sam Bankman-Fried personally borrowed at least $1 billion to support his luxury lifestyle and approved loans for his parents and co-workers.
Out of the 13 charges laid against him, Bankman-Fried will face 7 of them, beginning October 3, 2023, and the remaining accusations will be subject to a second trial scheduled for March 2024.
The case has been classified as “one of the biggest financial frauds” in U.S. history by New York U.S. attorney Damian Williams.
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