How billionaire ‘Crypto king’ faces 50 years in jail for £6,350,000,000 fraud
Disgraced crypto king Sam Bankman-Fried will be sent to prison today as he’s sentenced for fraud and money laundering.
The former billionaire is appearing in New York on Thursday after his cryptocurrency exchange company, FTX, went bust in 2022 with $8billion (£6.3billion) of customer funds missing.
At its peak FTX was valued at $32billion (£26billion), and Bankman-Fried became a business celebrity, promoting the firm and enticing millions of customers to invest.
Last November, a jury found Bankman-Fried had stolen billions of customer money ahead of FTX’s collapse in order to buy property, and make political donations and other investments.
But who is Bankman-Fried, what was FTX, what were his crimes and what will his punishment be? Metro.co.uk has the answers.
Who is Sam Bankman-Fried?
Sam Bankman-Fried was born in 1992 in California to Barbara Fried and Joseph Bankman, both professors at Stanford Law School.
He attended the Massachusetts Institute of Technology (MIT) in 2014 with a bachelor’s degree in physics and a minor in mathematics.
He started his finance career in 2013 as an intern at Jane Street Capital, a proprietary trading firm, trading international Exchange Traded Funds (EFTs).
In September 2017 he moved to Berkeley, California, where he worked briefly at the Centre for Effective Altruism.
By November, he co-founded the quantitative trading firm Alameda Research alongside Tara Hedley, after receiving funding from billionaire computer programmer Jaan Tallinn and investor Luke Ding.
In January 2018 he organised an arbitrage trade, taking advantage of the higher price of bitcoin in Japan compared to the US. He moved to Hong Kong after attending a cryptocurrency conference in Macau, and by April 2019 he had founded FTX.
In 2021 Bankman-Fried was included on the 2021 Forbes 30 Under 30 list – but following his conviction he was included in the 2023 Forbes Hall of Shame list, featuring 10 picks the publication wished it could take back.
What was FTX?
FTX was a cryptocurrency derivatives exchange founded in April 2019, opening for business the following month.
It operated as a cryptocurrency exchange and hedge fund, and at its peak in July 2021 it had more than one million users and was the third-largest cryptocurrency exchange by volume.
The company was incorporated in Antigua and Barbuda and had its HQ in the Bahamas.
Its name is an abbreviation of Futures Exchange and the company began with Alameda Research.
In January 2022 FTX announced a $2billion venture fund named FTX Ventures, and a month later it announced it would start offering stock trading to US customers.
It also created a gaming division to help developers add crypto, NFTs, and other blockchain assets into videogames.
FTX went into bankruptcy proceedings on November 11, 2022.
What went wrong at FTX and what was Sam Bankman-Fried accused of?
Binance CEO Changpeng Zhao announced his firm intended to sell its holdings of FTX’s token, which triggered a spike in customer withdrawals from FTX which it was unable to fill.
Binance announced it had entered into a non-binding agreement to buy FTX due to its liquidity cricis, but this was cancelled due to FTX’s mishandling of customer funds.
Anonymous sources stated that earlier in 2022, Bankman-Fried had transferred at least $4billion from FTX to Alameda without disclosing this to the public or either company’s insiders – and that total included customer funds.
Bankman-Fried resigned as CEP on November 11, 2022, and a day later he was interviewed by the Royal Bahamas Police Force.
FTX’s new CEO, John J Ray III, said in a sworn statement in bankruptcy court: ‘Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information.’
Bankman-Fried was arrested on December 12, 2022 and extradited to the US where he faced trial.
What was Sam Bankman-Fried found guilty of and what punishment will he face?
Bankman-Fried’s first trial ended on November 2 of last year, when a jury found him guilty of all seven charges of wire fraud, securities fraud and money laundering.
Prosecutors are pushing for him to spend 40 to 50 years in prison, saying the lengthy sentence is warranted for someone who stole billions.
Bankman-Fried’s lawyers say insisting on a lengthy term for a non-violent, first-time criminal is adopting a ‘medieval view of punishment’, instead calling for a sentence of six-and-a-half years.
He will be sentenced on Thursday and it’s not yet known how many years he will spend in prison.
Get in touch with our news team by emailing us at webnews@metro.co.uk.
For more stories like this, check our news page.