After the empire of the supposed crypto-genius and FTX CEO Sam Bankman-Fried began to crumble in November, the next development followed: The 30-year-old was arrested by Bahamian authorities.
Who is it about? Sam Bankman Fried is a 30-year-old American who was considered something of a financial prodigy or crypto-genius. In a Zoom meeting Bankman-Fried convinced investors of his app FTX while playing LoL. Subsequently, the impressed investors invested $214 million in the 30-year-old’s company.
In November 2022, revelations followed that caused the empire of the 30-year-old to crumble.
What happened in November 2022? It is alleged that Bankman-Fried held $14.6 billion in the in-house cryptocurrency “FTT” (FTX Token) through the crypto hedge fund Alameda Research (via cryptonews.de).
This led to a loss of trust in the cryptocurrency as Bankman-Fried is also the founder of Alameda Research, and it is a bad sign when a company holds so much value in its own currency.
Following the revelation, the acquisition of FTX by competitor Binance fell through. Additionally, Binance announced plans to withdraw approximately $2.1 billion from the currency FTT (via Twitter).
Shortly thereafter, the FTX Token collapsed and suddenly fell from $26 to $4. Also, Bankman-Fried’s fortune reportedly dropped from $15.2 billion to $991.5 million in a short time – a supposed loss of over $14 billion. Moreover, FTX filed for bankruptcy in November 2022.
Accusation of Misappropriation of Customer Funds
Why was Bankman-Fried arrested? The New York prosecutor announced on December 13, 2022, that Sam Bankman-Fried was arrested at the request of the US government by local authorities in the Bahamas (via Twitter).
As reported by the New York Times, prosecutors in Manhattan are investigating whether FTX violated the law. It is being examined whether FTX transferred customer funds in billions to the crypto hedge fund Alameda Research founded by Bankman-Fried and misappropriated them in that sense, which according to Business Insider is said to have led to significant losses on the part of the customers.
The prosecution also examines according to the NYT whether Bankman-Fried and Alameda Research were involved in market manipulations that may have contributed to the failure of two well-known cryptocurrencies last spring.
What is FTX? FTX is a trading platform founded by Sam Bankman-Fried. Users of the platform can trade cryptocurrencies.
In 2021, FTX invested in the e-sports organization TSM and became the name sponsor of the team, which is active in various games such as League of Legends, Apex Legends, and Rainbow Six: Siege. TSM has since competed as “TSM FTX”, but Riot Games had something against it.
