Chronicles of a Crypto Saga: The Rise and Fall of FTX CEO Sam Bankman-Fried
Summary:
The ongoing trial of former FTX CEO Sam Bankman-Fried is detailed, covering key moments including his charges related to the collapse of cryptocurrency exchange FTX, his subsequent arrest and house arrest, and the unfolding guilty pleas of FTX co-founder Gary Wang and Alameda Research CEO, Caroline Ellison. His rise and fall are examined, with contextual events highlighting significant developments in the case. It also addresses his public statements and efforts surrounding the downfall. The development of his businesses, his political ties, philanthropic pursuits, and the turmoil in the crypto market affecting his standing are all discussed.
Our reporters from Cointelegraph are currently reporting directly from New York, tracking the ongoing trial of former FTX CEO Sam “SBF” Bankman-Fried. Keep reading for live updates.
October 3 marks the commencement of the Bankman-Fried court proceedings in a federal court situated in Manhattan. Source: Ana Paula Pereira/Cointelegraph.
The trial initiated with the selection of the jury. Bankman-Fried is faced with seven accusations, which range from conspiracy to fraud, all related to the downfall of FTX, the cryptocurrency exchange that he helped establish. He has entered a plea of not guilty for all accusations. The hearing is being presided over by Judge Lewis Kaplan, who has supervised numerous renowned cases in the past, involving individuals such as detainees from Guantanamo Bay, members of the Gambino crime family, Prince Andrew, and Donald Trump.
Bankman-Fried was detained on Aug. 11 after Judge Kaplan established that he had been intimidating a witness by distributing the personal papers of former Alameda Research CEO, Caroline Ellison. Bankman-Fried is also the founder of Alameda Research, a trading house. Before his arrest, he had been under house arrest at his parents’ residence in Stanford, California, under a $250-million bond.
Bankman-Fried was placed under arrest upon his arrival to the United States from the Bahamas on December 21, 2022. The U.S. government had informed the Bahamas of the pending charges against him, leading to his arrest there on Dec. 12. Although initially, Bankman-Fried intended to contest his extradition from the Bahamas, he consented after spending a week in Bahaman jail.
As this case continues to unfold, both the co-founder of FTX, Gary Wang, and current Alameda Research CEO (who is rumored to have been romantically involved with Bankman Fried), Ellison, have agreed to plead guilty.
The downfall of Bankman-Fried commenced with the revelation that Alameda Research held a significant number of FTX Tokens (FTT), FTX's utility token on Nov. 2. This sparked concerns about the relationship between the two. Shortly after this, on Nov. 6, the CEO of rival exchange Binance, Changpeng Zhao, announced his intention to liquidate its FTT holdings that were valued at approximately $2.1 billion. Despite a public offer made by Ellison to purchase Binance's FTT, Zhao declined.
Following this, there was a rush to liquidate holdings at FTX. Bankman-Fried attempted to reassure investors via Twitter that the exchange’s “assets are fine”, blaming the give and take of rumors in the market for the unrest. By Nov. 8, the price of FTT fell from $22 to $15.40.
On the same day, he announced on Twitter about a strategic transaction agreement with Zhao, detailing that "This will clear out liquidity crunches; all assets will be covered 1:1.". However, Binance decided not to acquire FTX after due diligence and further revelations around mishandling of funds on Nov. 9. This led to a sharp fall in the price of Bitcoin (BTC) to $15,600. The FTX and Alameda Research websites went offline temporarily. When FTX restored its website, it came with a warning against making deposits and withdrawals were not being processed.
On November 10, Bankman-Fried expressed his regrets in a 22-part Twitter thread, starting with “I’m sorry.” This marked the beginning of numerous public announcements he made about the unravelling of the exchange. On the following day, the entire staff of Alameda Research resigned and FTX, FTX.US and Alameda Research filed for bankruptcy in the United States. Subsequently, Bankman-Fried stepped down as CEO and was replaced by John J. Ray III.
In early 2022, FTX was estimated to have a valuation of $32 billion and was viewed as financially robust. Bankman-Fried himself commanded a considerable amount of respect in the crypto and larger business community and was well-regarded as a business leader, philanthropist and political contributor.
However, as the crypto market turned bearish, Bankman-Fried addressed the need for FTX and Alameda Research to intervene to contain the damage even at a potential loss to themselves. The companies even proposed an unsuccessful bid for Voyager Digital.
FTX collaborated with Visa to roll out its own debit card across 40 countries.
Bankman-Fried, Ellison, and several fellow Jane Street Capital alumni established Alameda Research in 2017. Two years later, in 2019, Bankman-Fried and Wang founded FTX.
The details of this ongoing narrative will be updated as soon as more information is available.
Published At
10/4/2023 3:58:35 PM
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