Last Updated on 2022-12-15 , 4:28 pm
The Humpty Dumpty of the crypto world has fallen.
I’m referring to none other than FTX’s mastermind Sam Bankman-Fried, who has recently been arrested in the Bahamas for his company’s catastrophe.
FTX’s Founder, Sam Bankman-Fried, Arrested After the US Files Criminal Charges Against Him
Since FTX’s implosion, the name has fizzed up everywhere.
Now, capping the series of events is his arrest.
FTX’s founder Sam Bankman-Fried was arrested by authorities in the Bahamas on Monday (12 December). This follows after the United States Attorney for the Southern District of New York filed criminal charges against him.
In a statement, Damian Williams, the attorney, said that the arrest was made at the request of the American government.
Bankman-Fried is expected to be extradited to the US for trial.
What does this mean?
Although he’s in the Bahamas now (and FTX’s headquarters are there), he’ll have to return to the US for his processing because his crime was committed there.
Since FTX’s collapse, Bankman-Fried has admitted to several managerial blunders but has clarified that the company’s implosion, or the violation of the law, was never part of his plan.
The ex-multibillionaire testified virtually before the House Financial Services Committee on Tuesday (13 December).
Like an unsharpened pencil, he said, “I would like to start by formally stating under oath: I f***** up.”
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Fall of FTX
Futures Exchange, better known as FTX, is a cryptocurrency exchange system promoting digital currency transactions.
Started by Sam Bankman-Fried in 2019, this platform initially saw hypergrowth. However, as it increased in popularity, it needed more to supply customer demand.
It was revealed to the public that Bankman-Fried had taken US$10 billion of FTX funds and pumped it into Alameda, and reports alleged that Alameda had loans amounting to US$7.4 billion.
For those who don’t know, Alameda is another company founded by Bankman-Fried.
Many were sceptical about the solvency of the company (the ability to meet long-term debts and financial obligations) and worried that they stood to lose all their money. As such, they withdrew from the market.
The mass market pullout meant that FTX had to return the users’ money to them. Unfortunately, they lacked assets in their reserve to meet the demand and were forced into filing for bankruptcy.
On 11 November 2022, Bankman-Fried stepped down as CEO of FTX, and FTX filed for Chapter 11 bankruptcy.
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