Former multi-billionaire Sam Bankman-Fried (SBF) is going to trial for allegedly stealing billions of dollars from his cryptocurrency brokerage FTX customers customers. SBF’s net worth was $32 billion before the collapse of FTX in November of last year. He allegedly used FTX customers’ deposits to fund his volatile hedge fund Alameda Research, purchased real estate, and attempted to buy influence over cryptocurrency regulations.
Bankman-Fried is currently 31 years old and created FTX back in 2019. He started it with his co-founder Gary Wang. With the increase in buying of cryptocurrencies in 2021, FTX rose to the top of the market as one of the leading cryptocurrency exchanges. With this newfound influence and fame, Bankman-Fried spent his money lavishly. He spent around $300 million on properties in the Bahamas, including a 600-acre oceanfront property. SBF also spent $210 million to rename an esports team and $135 million to change the Miami Heat arena name. Other partnerships that FTX purchased were the MLB and the Mercedes-AMG Petronas Formula 1 Team. Bankman-Fried attempted to further his influence in the political space by paying large sums to politicians. Newspaper Publisher Roll Call states “Over 40 percent of the members of the 118th Congress received financial support from FTX Executives.” With FTX aggressively spending to advertise their exchange further, the company’s finances were left in a vulnerable position. Bankman-Fried used customer funds to invest in his risky cryptocurrency firm, Alameda Research.
With the decline of cryptocurrency prices, many people were withdrawing from FTX. This left FTX in a vulnerable position where they could go bankrupt. Another cryptocurrency giant, Binance, purchased vast amounts of FTX’s cryptocurrency tokens, known as FTT tokens. A leak claimed Sam Bankman-Fried put $10 billion into Alameda Research, which caused Binance to sell a quarter of their FTT tokens. Following Binance’s lead, investors withdrew funds, which drove FTX into bankruptcy. SBF was later arrested and extradited to New York, where his trial began on October 4.
Many FTX executives have chosen to testify against Bankman-Fried in exchange for lesser charges for their crimes. FTX´s co-founder Gary Wang admitted under oath that they committed fraud. Other individuals close to SBF, including the platform’s software engineer, have already testified against him. Time will tell what charge Bankman-Fried will receive, but currently, he has pleaded guilty to seven counts of fraud and conspiracy.
