FTX Founder in Court Charged with Fraud and Money Laundering: The Steep Rise and Fall of Sam Bankman-Fried

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Sam Bankman-Fried (31) will be tried on Tuesday in New York. The founder of the now bankrupt cryptocurrency platform FTX is alleged to have defrauded customers of billions of dollars and misled investors, according to legal authorities. Blick tells his crazy life in fast motion.

Sam Bankman-Fried was hailed as a crypto wonder. After studying physics at the renowned Massachusetts Institute of Technology (MIT), his professional life took him to Wall Street before diving into the crypto world.

The young Californian with an entrepreneurial spirit founded FTX – an exchange for trading cryptocurrencies – in April 2019. He had already founded Alameda Research, a crypto investment fund, in October 2017. Successfully.

His fortune was at one point estimated by Forbes and Bloomberg at more than $26 billion. In 2021, he ranks 32nd on Forbes’ list of richest Americans. Bankman-Fried, nicknamed “SBF,” graced the covers of U.S. commercial papers.

In the Bahamas – the headquarters of FTX – he lived with his then girlfriend Caroline Ellison (28) in a five-bedroom penthouse. The couple is said to have had wild sex parties in this $40 million shared apartment. Ellison himself spoke of a ‘harem’ on social networks.

Drugs may also have been involved. “Nothing like regular amphetamine use to realize how stupid much of the normal, non-medicated human experience is,” the friend has tweeted in the past.

Bankman-Fried is vegan and sees herself as an ‘effective altruist’. This is a movement that calculates how it can most effectively help other people. The effective altruists look at where they can best spend their time and money. Bankman-Fried has always said he donates most of his wealth to good causes. However, after the collapse, he said that this “ethics stuff” was just a “stupid game played by woke Westerners” where you say the right thing so others will like you.

FTX will become the second largest crypto exchange in the world within three years. But in November last year the tide turned and FTX went bankrupt. After archrival Changpeng Zhao (46), head of Binance, announced that he would sell all FTX tokens – due to “recent revelations”. Bankman-Fried initially tries to save his empire, but fails miserably. Customers withdraw money from the exchange. On November 11, he resigned and filed for bankruptcy of the group.

Then it turns out that FTX used customer money to support Alameda Research. The hedge fund affiliated with FTX was previously in the red. There was talk of ten billion dollars that the CEO of FTX was alleged to have embezzled.

Other former FTX executives have pleaded guilty and accused the company’s founder. To this day, he denies all accusations: “I didn’t steal anything, and I certainly didn’t hide billions.”

On December 12, the handcuffs were still clicking. The US Justice Department has filed charges of financial fraud and money laundering. The young American was arrested in the Bahamas and later extradited to his home country.

Initially he did not have to go behind bars. He was released on bail for the equivalent of R219 million. From then on, he was under house arrest at his parents’ home in California. In August it was said: Bankman-Fried had to be returned to custody. The prosecutor had argued that he violated the conditions of his bail and influenced witnesses.

Caroline Ellison, Bankman-Fried’s girlfriend, was CEO of Alameda Research. The very talented woman is said to have written a scientific article at the age of eight and given it to her father. During the course of the crypto affair, she pleaded guilty and denounced Bankman-Fried. Alameda allegedly invested FTX customers’ money in crypto companies – without the investors’ knowledge.

Bankman-Fried in turn blames his ex. Alameda failed to adequately protect itself against the risk of an extreme market crash. When its sister company started to falter, FTX pulled along.

Bankman-Fried’s parents Barbara Fried (71) and Joseph Bankman (68) are both professors at the law faculty of the renowned Stanford University. At their home, the son had to wait for trial after being released on bail. As the ‘FAZ’ writes, the two were for a long time seen as concerned parents whose child ended up on the wrong track. They are now suspected of being involved in the financial affair.

FTX, which was taken over by trustee John Ray III after the collapse, sued the parents last month. The son is said to have embezzled company funds on her behalf, among other things. We’re talking gifts worth millions of dollars and a $16 million villa in the Bahamas. In addition, part of the FTX funds are said to have been invested in a politically left-wing organization that Barbara Fried founded.

The son himself claims that his parents were not involved in the company.

The trial has now started in New York. Bankman-Fried is charged with several charges. These include fraud, money laundering and embezzlement of customer funds. He is also said to have violated campaign finance laws. Investigators say he spent more than $100 million in campaign contributions in 2022. The trial lasts six weeks. If convicted, he could face up to 110 years in prison! He himself pleaded ‘not guilty’ during an initial hearing in January.

Source: Blick