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Sam Bankman-Fried faces criminal charges and is expected to plead Jan. 1. 3.
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The FTX founder’s dramatic arrest in the Bahamas followed a bizarre media tour and damning court filings.
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Here is the guide to everything that has happened so far in the FTX saga.
In just a few years since founding crypto exchange FTX in 2019, Sam Bankman-Fried has built a respectful following among the American political and financial establishment.
Then everything fell apart.
often dressed as if fresh out of a game of squash, the 30-year-old former crypto billionaire appeared with the likes of Bill Clinton and the Davos eliteevangelizing about the future of crypto.
FTX represents a new type of exchange that promised traders a safe and efficient way to transact around various cryptocurrencies. This vision and the growth of its customer base has attracted high-level investments VCs like Sequoia Capital, Tiger Global and SoftBankhelping the company to quickly reach a breathtaking level $32 billion worth. The Bankman-Fried value was once pegged at around $20 billionaccording to Bloomberg.
With some $8 billion in client funds apparently missing, financial regulators alleged that what happened at FTX was not new and complex financial engineering, but a simple and audacious fraud scheme accompanied by a simple mismanagement.
the banker Fried, with the obliging support of his lieutenantssent funds from FTX clients to his other company Alameda Research, which allegedly squandered that bounty on risky investments and also served as his “personal piggy bank”, according to the U.S. Securities and Exchange Commission.
Manhattan federal prosecutors also ensnared Bankman-Fried, with what turned out to be cooperation from his ex-girlfriend and former Alameda CEO Caroline Ellison and the former FTX co-founder. , Gary Wang. All three were hit with serious criminal charges for fraud and conspiracy.
Bankman-Fried’s project was also about cultivating a sense of legitimacy and ethics around the theoretically lucrative and virtually unsupervised scheme that is crypto. He was the rare industry CEO to actively court regulation amid the integration of a shadowy economy where lack of oversight had been central to his appeal.
He established himself as a generous donor for most Democratic candidates. Celebrities like Larry David and Gisele Bündchen flocked to his cause, fueling hype in ads, including a now-mortifying Superbowl ad that became the subject of an ongoing trial by investors.
The fall of Bankman-Fried and the implosion of FTX happened so quickly that you may have missed some of the saga’s most surprising details. We’ve woven them all together so you can catch up on some of the key characters in the story of FTX’s downfall, mind-boggling investigations, and litany of accusations so far:
Sam Bankman Fried
An MIT physics grad who slept on beanbags in the FTX office, played video games at pitch meetings, and whose work uniform consisted of sneakers paired with calf-high white socks and seemingly straight-out-of-the-dryer T-shirts, Bankman-Fried projected an old-fashioned aesthetic that seemed to define a new kind of tech billionaire.
He also promoted the image of a demanding and consuming work environment in his companies, saying until the end that his problem could be. working only 13 hours a day, compared to the normal 18 hours.
His business in the Bahamas then caught the attention of the people who run it and their relationship with each other, with Coindesk reports that a “gang of children” were behind the company.
In the weeks leading up to his arrest, he had made several media rounds – mind-boggling observers and possibly his own lawyers at the time — to explain his version of events, which boiled down to acknowledging that his companies lacked the internal oversight that investors believed.
He had even planned to testify before a House panelbut was arrested in the Bahamas the day before the hearing.
Read Insider’s Bankman-Fried coverage:
The Rise and Fall of FTX’s Sam Bankman-Fried From Crypto Billionaire to Arrest and Fraud Accusation
Joseph Bankman and Barbara Fried
Barbara Fried and Joseph Bankman are both Stanford law professors whose home in Palo Alto is both a haven for their son who is Currently out on $250 million bailand a guarantee for this amount, which they did not have to pay. That means if he runs away, they could lose the house and potentially have to pay some of that multi-million dollar sum.
Regulators also alleged that his parents could have benefited from the scheme, although they were not named as defendants. “Bankman-Fried also used mixed funds from Alameda to make large political donations and purchase tens of millions of dollars in Bahamas real estate for himself, his parents, and other FTX executives,” the SEC said in its complaint.
Read Insider’s coverage of Bankman-Fried’s parents:
Sam Bankman-Fried’s mother is pictured arriving at his bail hearing in New York
Caroline Ellison
The daughter of MIT professors, Ellison was known from an early age as a mathematical genius and met Bankman-Fried at the Jane Street trading company. Bankman-Fried said they once dated.
Now stricken with 7 criminal charges, Ellison has pleaded guilty and made his claim in federal court in New York presiding over criminal cases involving Bankman-Fried. As head of Alameda, Ellison allegedly helped the company borrow “billions of dollars”, using FTX’s illusory FTT token as leverage, according to the SEC.
Read Insider’s coverage of Caroline Ellison:
Gary Wang
Regulators also charged Wang, who also separately pleaded guilty to his own criminal charges, with facilitating the scheme that sent FTX funds to Alameda. They claimed he helped create the code that created this channel to drain FTX funds, and that he took $200,000 of the company’s money “for his own purposes.”
Read Insider’s Gary Wang coverage:
John J. Ray III
John J. Ray III had chosen words about FTX when he took over as CEO to lead its surprise bankruptcy filing in November. The restructuring expert, known for helping to maximize recoveries for creditors of collapsed companies like Enron, told a Delaware bankruptcy court there was a virtually unprecedented situation. “Complete failure of company controls” at FTX.
Read John Ray’s Insider coverage:
New FTX CEO John Ray Makes $1,300 An Hour To Clean Up Sam Bankman-Fried’s Crumbling Crypto Empire
Read the explosive bankruptcy filing where new FTX CEO called out Sam Bankman-Fried
What happened
FTX filed for Chapter 11 restructuring in Delaware in November, after fellow cryptocurrency exchange Binance dropped a plan to eventually take it over. The filing set off a series of events for the dramatic capture of Bankman-Fried in the Bahamas.
As US investigators closed in, current FTX CEO Ray described a company with little to no internal protocols regarding basic accounting and management. He said, for example, that employee expenses were sometimes approved with emojis and the company used the QuickBooks accounting toolan odd choice for a large company.
But Bankman-Fried continued to keep a public profile, presenting himself as an open book ready to discuss FTX’s collapse and the mistakes that led to it.
During a turbulent week in December, Bankman-Fried was arrested in the Bahamas, held in custody at Fox Hill Prison there, and extradited At New York.
Read Insider’s coverage of the FTX saga so far:
The lawyers walked us through FTX’s bankruptcy filing. It’s really, really bad.
The SEC indicted Sam Bankman-Fried and accused him of “orchestrating a massive multi-year fraud”.
The charges against Caroline Ellison, SBF and FTX co-founder Gary Wang – in 60 seconds
Read the original article at Business Intern
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