February 4, 2023

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FTX founder Sam Bankman-Fried was deported to the US

FTX founder Sam Bankman-Fried was deported to the US

Sam Bankman-Fried and his team ran a crypto company called FTX out of the Bahamas. Until recently, he was considered one of the richest crypto entrepreneurs in the world, but his empire collapsed like a house of cards. He spent a week in jail and has now been extradited to the United States. “Like many people, I am shocked by what has happened in the last month,” he said after his arrest.

Sam Bankman-Fried lost and was exiled to the United States

The SEC and the New York Public Prosecution Service filed suit earlier this month and hold Bankman-Fried accountable for systematically defrauding investors over the years. “Unbeknownst to investors, Bankman-Fried committed a massive multi-year fraud that used billions of dollars in client assets for personal gain and the growth of his own empire,” the SEC wrote.

He is suspected of fraud, conspiracy and money laundering. Based on that, he was arrested by US authorities last week. Like two of his most influential employees, Carolyn Ellison (former director of Alameda Research, Bankman-Fried’s investment firm) and Gary Wang (co-founder of FTX).

They were released after pleading guilty on $250,000 bail and awaiting trial in the United States. This sentence causes a significant shortening of the sentence. If they don’t do this, Ellison faces up to 110 years in prison and Wang faces up to 50 years in prison.

“One of the largest financial fraud cases in US history”

Prosecutor Damian Williams believes the entrepreneur’s shady practices are “one of the largest financial fraud cases in American history.” Bankman-Fried collected $1.8 million from investors, but used it for his own interests. “The investigation is in full swing,” he said in a video release.

Conflict of interest did the trick

Until November, FTX was one of the largest crypto exchanges in the world, but it suddenly turned around. Investors lost faith in the company when it was leaked that there was a conflict of interest between FTX and Alameda. An estimated $10 billion was used to pay off Alameda debt from FTX customers.

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Binance expressed interest in acquiring FTX, but the crypto exchange told The Wall Street Journal that the problems “we can’t control, we can’t help them.” After the departure of various clients, companies and investors, Sam Bankman-Fried’s fortune dropped from around $17 billion to less than €1 billion. A drop of not less than 94%. “The Biggest Loss in a Day” was the headline of Bloomberg Business Magazine at the time.