I'm sure you saw the headline: 110 years. That's how long fallen cryptocurrency boss Sam Bankman-Fried could spend in prison. After a month-long trial, the FTX founder was found guilty of seven counts, all related to the cryptocurrency exchange's theft of $8 billion from users.
In 2021, SBF traded $20 billion worth of cryptocurrencies daily, named stadiums, bought villas in the Bahamas, and ran Super Bowl ads. Something went wrong? Short answer: everything .
Now he's talking to Bernie Madoff. It's so fascinating that I wanted to take you down the winding path of the biggest cryptocurrency mess we've ever seen.
"Kim, I don't know anything about cryptography."
Everything is fine. The main question the jury had to answer was simple: no knowledge of blockchain, wallets or keys was required. Did the 31-year-old SBF deliberately deceive clients and use all the money invested as if it were his own? The answer (which you know will be challenged on appeal) is yes.
$26.5 billion
That's what SBF was worth when its cryptocurrency trading platform reached its peak. I bet you've seen him in court, the guy with curly hair, sneakers and a threadbare suit to testify before Congress.
The MIT graduate co-founded FTX (short for Futures Exchange) in 2019. As of July 2021, its valuation and investments from Softbank, Sequoia Capital and other major companies reached $18 billion. It just grew from there.
Remember the Super Bowl commercial with Larry David? It was FTX. (His parents are obviously big fans.) The company also donated money in the Bahamas, where it opened its official headquarters.
SBF bought a $35 million penthouse that he shared with nine people. In total, FTX spent $256.3 million acquiring and maintaining 35 different properties.
Spoiler: It didn't end well
While FTX was raising money, it came in handy for trading firm Alameda Research. SBF maintains an ongoing relationship with CEO Caroline Ellison. Seriously, it's like a soap opera.
A little suspicion from cryptocurrency leaders was enough to trigger a cascade that left FTX scrambling to explain where $8 billion of customer funds went.
SFB's defense was essentially, "Oh, I didn't mean to do that." The following led to this belief:
- He appears to have funneled billions of FTX into his hedge fund, Alameda Research. Super illegal, guys.
- Where did it all go? These billions supported loans and luxurious lifestyles, and financed political campaigns in the United States. Makes sense, doesn't it? They urgently needed cryptocurrency-friendly legislation.
- There was simply no protection for investors, customers and billions of dollars.
- Several former colleagues who took the witness stand said they knew exactly what was going on behind the scenes.
Sentencing is expected at the end of March, but no, no, it's not over yet. There is a second round of charges, including bribery of foreign officials and conspiracy to commit bank fraud.
I feel terribly sorry for the people who lost everything. Cryptocurrency was huge in 2020 and 2021, and FTX was so hyped that it was impossible to go back and not see it somewhere.
This really highlights an important point for all of us: the rules of fair play apply in both the virtual and physical world. What about those who try to bend them? Justice may be just a click away.
⚖️ I bet you know someone who has seen the headlines but has no idea what they are about. Share this story with them so they know.