Sam Bankman-Fried co-founded FTX in 2019 and is its CEO. Photo FTX
What else but the whole Sam Bankman-Fried and the crash of FTX scandal could possibly have been our biggest business story of 2022? At least three people have already been charged with felonies – 2 made plea deals – including Bankman-Fried himself. FTX has been described as a Ponzi scheme on the level of Bernie Madoff’s, with the addition of outright embezzlement (alleged) charges.
If you were one of those people who still thought that cryptos were going to be a legitimate currency someday, just look at what happened at a number of blockchain service firms. Since the “currency” is virtual there is no way to truly protect it.
And what Sam-Bankman Fried and his pals did at FTX (allegedly) is proof positive why one should never get involved in cryptos and why we just had to make the whole affair – albeit a negative one about a crime – the greatest JBN news story for the year 2022.
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As of today, Sam Bankman-Fried stands accused of eight counts of fraud and conspiracy. If convicted on all counts, he could be sentenced to as much as 115 years in jail. The charges came after his FTX crypto currency exchange company went bust a few weeks ago. He is currently out on $250 million bail and under house arrest at his parents’ home.
The big question over the fall of FTX is “what happened to all of the money that people left with the company?” FTX was a crypto bank, so to speak, a place where people could park their virtual assets. But unlike with banks, there is no regulation over the handling of cryptos and FTX is said to have moved people’s cryptos around, basically that the company spent their money.
And after FTX crashed creditors found that about $1 billion in funds were missing. Sam Bankman-Fried was accused of secretly moving $10 billion in FTX funds to trading firm Alameda research, which was founded by Bankman-Fried and thought of as a sister company to FTX. American prosecutors would like to prove that this was a case of embezzlement, while Bankman-Fried’s lawyers will surely try to claim it was simply an attempt to invest the funds to make more money.
Sam Bankman-Fried associates Gary Wang, who co-founded FTX, and Caroline Ellison, who served as the CEO of Bankman-Fried’s crypto hedge fund company Alameda Research, both pled guilty to various charges related to the collapse of FTX just a few weeks ago. Now the world waits to see what happens to Bankman-Fried himself when he finally appears in court.
U.S. Attorney Damian Williams revealed the guilty pleas, but he did not specify exactly what charges the former FTX people pled guilty to, nor what sentences they may be facing. It can be inferred at this time, however, they did enter into some sort of plea bargain.
Caroline Ellison, 28, was said to have been romantically involved with Bankman-Fried. Among the charges leveled against the two is that they allegedly “embezzled” funds that belonged to FTX depositors and invested them in Alameda Research.
So, to Sam Bankman-Fried, Caroline Ellison and all of the people who enabled a few Gen Y’ers to get away with a scam (allegedly) because they thought these people could actually be trusted with a fortune, thank you for giving us so much to write about in the closing weeks of 2022.
