Besides Ellison, two onetime friends of Bankman-Fried — Gary Wang and Nishad Singh — testified they felt they were directed by Bankman-Fried to commit fraud. One FTX customer, Sunil Kavuri, spoke at sentencing, saying he’d traveled from London on behalf of over 200 victims who had sent impact statements to the judge. The judge said Bankman-Fried utilized that risk-taking nature at his companies, “betting on expected value” and weighing the risk of getting caught with the probability of large gains.
FTX has continued its downward spiral after filing for bankruptcy on Friday. Another big name from the industry has also admitted to mishandling funds, spooking investors even more. Some industry insiders have said the company’s downfall had triggered a “Lehman moment,” referring to the 2008 collapse of the investment bank that sent shockwaves around the world. The plunge comes as investors continue to grapple with the stunning implosion of FTX, one of the biggest and most powerful players in the industry. Aftershocks from the massive earthquake in the trillion-dollar crypto industry last week continued to reverberate on Monday.
The now arrested FTX founder gave almost $40 million toward campaigns and political action committees in the 2022 cycle, with most those funds focusing on helping Democrats, according to data from OpenSecrets. The disgraced crypto executive regularly met with lawmakers on Capitol Hill and was a prolific campaign financier, contributing nearly $40 million in publicly disclosed donations toward the 2022 midterm elections. The majority of his contributions toward federal campaigns were directed to Democrats.
Ryan Salame was originally sentenced to 7.5 years for his role in the FTX scandal. The Federal Bureau of Prisons lists his release date as more than a year earlier than his original sentencing. His new release date is March 1, 2031, compared to his initial release date in April 2032. On April 9, 2023, FTX debtors released their first report outlining the failures of FTX Group’s management team before bankruptcy. “The FTX Group lacked appropriate management, governance and organizational structure,” the report stated.
While Serrano continued to speak with the victim, Lam used the access keys to steal the bitcoin. Serrano purportedly continued to manipulate the victim into opening several files, including those with private keys to over 4,100 bitcoin. They then asked the victim to download a remote desktop connection program for his own security. This program gave Lam and Serrano real-time access to the victim’s computer.
In December 2022, Bankman-Fried was arrested in the Bahamas after US prosecutors filed criminal charges against him. In January 2022, as cryptocurrency prices were still hovering near all-time highs, FTX was valued at $32 billion, with high-profile investors like SoftBank and BlackRock. In a police interview, Lam admitted to carrying out additional hacks and making millions from those separate cryptocurrency fraud schemes. Initially, they allegedly convinced the victim to transfer about US$3 million of cryptocurrency to a crypto wallet controlled by Lam. He also “further scoured” the victim’s private accounts looking for additional information, court documents showed. According to court documents, substantial planning went into the scam, with a co-conspirator causing “unauthorised Google account access” notifications to be sent to the victim in the week leading up to the theft.
The US government has flexed its regulatory muscles without concern for damaging the appeal of its crypto market, although of course that market is much larger. We have followed up this research with a study this year of British attitudes towards cryptocurrency. Our new work, which has not yet been published in an academic journal, suggests that the FCA is more in tune with British public opinion than the government. Among the four countries we surveyed in March 2023 – with responses from more than 36,000 people – British respondents expressed the highest level of support for crypto regulation. Such changes in public opinion are not simply abstract experimental effects. In a separate article, Harvard professor Taeku Lee and I have shown how a US Congress investigation of Goldman Sachs’ role in the global financial crisis drew public attention to malfeasance by big banks and the position of political parties on it.
The prosecution presented evidence that Bankman-Fried’s crypto trading firm Alameda Research received deposits on behalf of FTX customers from the early days of the exchange, when traditional banks were unwilling to let it open an account. As the largest collapse of an exchange in the short history of cryptocurrencies, the events at FTX have deterred cautious investors from remaining in the market, and business partners owed money have been forced to shut down. FTX was a leading cryptocurrency exchange that went bankrupt in November 2022 amid allegations that its owners had embezzled and misused customer funds. Sam Bankman-Fried, the CEO of the exchange, was sentenced to 25 years in prison and ordered to repay $11 billion. FTX founder Sam Bankman-Fried was sentenced Thursday to 25 years in prison for a cryptocurrency fraud that a prosecutor has described as one of the biggest financial frauds in U.S. history.
However, it is difficult to ascertain how and why the company’s funds were handled the way they were, according to a court filing from FTX’s current CEO, John Ray, who helped navigate Enron through its corporate bankruptcy process in the early 2000s. And in the Vox interview, Bankman-Fried appeared to confirm reports that funds had moved between FTX and Alameda, adding that he “thought Alameda had enough collateral” to cover the moves. On Nov. 8, FTX stopped allowing customers to take money out of the platform.
