TheWeek The Week US Edition US UK SUBSCRIBE & SAVE Less than $3 per week × Search Sign in View Profile Sign out Daily Briefing Talking Points The Week Recommends Newsletters Cartoons From the Magazine The Week Junior More Politics World News Business Health Science Food & Drink Travel Culture History Personal Finance Puzzles Photos All Categories Newsletter sign up Newsletter Crime Sam Bankman-Fried: crypto on trial The implosion of FTX may go down as one of the biggest financial frauds in American history Newsletter sign up Newsletter Sam Bankman-Fried has become the ’embodiment of crypto’ (Image credit: Angus Mordant/Bloomberg via Getty Images) By The Week Staff published 28 September 2023 Sign up to our 10 Things You Need to Know Today newsletter A free daily digest of the biggest news stories of the day – and the best features from our website Name: Your Email Address Contact me with news and offers from other Future brands Receive email from us on behalf of our trusted partners or sponsors Thank you for signing up to TheWeek. You will receive a verification email shortly. There was a problem. Please refresh the page and try again. By submitting your information you agree to the Terms & Conditions and Privacy Policy and are aged 16 or over. Sam Bankman-Fried, the founder of the FTX crypto exchange, which collapsed last November, is scheduled to appear in a New York court next week, charged with eight counts of fraud, which, if proven, could mean a 115-year prison sentence. “It is a matter of public record that customer funds have been mishandled,” said Zoe Williams in The Guardian: at least $4bn in client funds was transferred from the crypto platform to Bankman-Fried’s private trading firm, Alameda Research. So the question for the jury is essentially: “conman or idiot”. Yet much more is at stake. Worth $26bn in his short-lived prime, Bankman-Fried has become “the embodiment of crypto: his rise astronomical, his demise spectacular”. The case will shed light on the wild west-style regulation that allowed him to operate. It isn’t just “the crypto king” who’s on trial; “it’s the future of crypto regulation”. Subscribe to The Week Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives. SUBSCRIBE & SAVE Sign up for The Week’s Free Newsletters From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox. From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox. Sign up ‘A mammoth recovery task’ Ahead of the proceedings, FTX’s current CEO and restructuring expert, John Ray, has been overseeing “a mammoth recovery task”, said Teresa Xie on Bloomberg. Ray helped untangle the mess following energy giant Enron’s bankruptcy in 2007. And of late, he has been “accelerating efforts to recoup billions of dollars” – notably suing Bankman-Fried’s parents, professors at Stanford Law School, for allegedly siphoning off millions from FTX in “fraudulently transferred and misappropriated funds”. Outside investors are trying to get a piece of the bankruptcy pie too. “Distressed-debt investors”, including Silver Point Capital, Diameter Capital and Attestor Capital, have bought more than $250m worth of FTX debts – “betting that the company’s lengthy bankruptcy process will uncover additional valuable assets”. ‘Pivotal’ evidence of former girlfriend In all, Bankman-Fried is charged with causing the loss of more than $8bn in customer assets, said Sheelah Kolhatkar in The New Yorker. Victims range from the supermodel Gisele Bündchen to “construction workers, small-business owners and college students”. Ironically, before the collapse, SBF, as he was known, was regarded as a white knight in the wider crypto meltdown and an altruistic philanthropist. That profile, and the backing of venture capitalists such as Sequoia Capital, persuaded many investors that his company was sound, despite his eccentric media appearances and reports of louche living at FTX’s Bahamas HQ. It won’t help Bankman-Fried’s case that four of his close lieutenants – including his on/off girlfriend Caroline Ellison, who ran Alameda Research – have reached deals with prosecutors, said James Gordon in the Daily Mail. Her evidence is likely to be “pivotal”. This promises to be a fascinating financial trial, but a powerful human story too. Explore More Cryptocurrency Talking Point Continue reading for free We hope you’re enjoying The Week’s refreshingly open-minded journalism. sign up to continue reading Already have an account ? Sign in here Subscribed to The Week? 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Sam Bankman-Fried: crypto on trial
