(Reuters) – The collapse of FTX has rocked the cryptocurrency industry. Now the founder of the cyber currency exchange, Sam Bankman-Fried, has to answer before a US court for alleged fraud.
Below are some questions and answers about Bankman-Fried and this affair:
WHO IS SAM BANKMAN-FRIED?
Sam Bankman-Fried is the son of college professors Joseph Bankman and Barbara Fried. The 30-year-old grew up in California and studied at the renowned Massachussetts Institute of Technology (MIT).
After graduating from college, he joined brokerage firm Jane Street as a cryptocurrency trader and made his fortune betting on bitcoin price differentials on exchanges in the US and Asia. In 2017 he became self-employed with the brokerage house Alameda, in 2019 he founded the crypto exchange FTX.
FTX was valued at $32 billion in early 2022. Forbes magazine put Bankman-Fried’s personal fortune at $26.5 billion. Known in financial circles by his initials “SBF,” Bankman-Fried’s trademarks are his curly mop of hair and unconventional appearances in T-shirts and shorts. He donated $5.2 million to Joe Biden’s presidential campaign in 2020 and was one of the largest donors to his Democratic Party.
WHY DID FTX COLLAPSE?
After rumors of irregularities and a failed rescue by archrival Binance, investors withdrew money from FTX on a large scale. As a result, the crypto exchange filed for bankruptcy protection on November 11. According to insiders, Bankman-Fried secretly transferred $10 billion in FTX client funds to Alameda. In November 2022, he himself spoke to the Reuters news agency of a wrong interpretation of his “confusing internal labeling”.
WHY WAS BANKMAN-FRIED ARRESTED?
Bankman-Fried was arrested at his home in the Bahamas in mid-December 2022 and extradited to the United States. The local authorities accuse him of fraud, among other things. If convicted, he faces up to 115 years in prison. In addition, FTX customers want to file a class action lawsuit. Bankman-Fried will not have to go into custody for the time being on bail of $250 million. Among other things, his parents are responsible for this sum.
(Compiled by Hannah Lang and Tom Hals, written by Hakan Ersen. If you have any questions, please contact our editorial team at [email protected] (for politics and economics) or [email protected] (for companies and markets) .)