By Aarav Sapra
Former CEO of FTX, Sam Bankman-Fried, has been found guilty of multiple charges of security fraud, wire fraud, conspiracy and money laundering, and he might go down as “One of the biggest financial frauds in American history.” FTX, known as the Future Exchange, is a company that once operated as a digital currency exchange platform for buying or selling cryptocurrency. In other words, FTX acted as a platform for personal accounts of cryptocurrency.Â
The story of FTX started in 2018 when Sam Bankman-Fried and Gary Wang founded it, and it aimed to achieve a sophisticated and user-friendly cryptocurrency exchange. As an MIT graduate with a background in quantitative trading, Bankman quickly attracted many small investors who gave the company a push. This soon led to more and more people hopping onto the platform, propelling the exchange as one of the biggest cryptocurrency exchanges. As the company continued to expand, it allowed many people to generate millions of dollars. For instance, celebrities like Stephen Curry and Tom Brady invested in this platform. As the FTX platform grew, so did Sam Bankman’s wealth and influence. However, beneath all this success, greed had taken over and controlled Sam Bankman. Behind one of the biggest cryptocurrency exchanges was the most significant American fraud scheme involving diverting customer assets for personal and corporate gain.
Sam Bankman transferred this considerable amount to finance his sister company, Alameda Research, a firm similar to FTX that was involved in the trading of cryptocurrencies. Caroline Ellison, a testimony of Bankman’s inner circle, later explained that Sam-Bankman used the money for his personal investments and political donations. An example that was part of this fraud was the 35 million dollar Bahamian property that nine people shared. On the other hand, three years later, nearly 9 million customers who invested in FTX were mourning losses as their money pooled in the $8.9 billion worth of customer assets missing from the exchange. Clearly, these funds were not used appropriately and were suited to entertain Mr. Bankman-Fried’s lavish lifestyle.
The downfall of FTX appeared in early November 2022, when the platform experienced a plunge, and FTX filed for bankruptcy as investors continued to withdraw their funds out of their accounts, leaving thousands of customers stranded without access to their money. In the aftermath of FTX’s collapse, Sam Bankman faced many lawsuits and criminal charges. In November 2023, he was convicted of multiple penalties, and his charges may add up to 110, changing the status of once a successful entrepreneur to now an offender who has committed multiple felonies.
