Charges continue to mount against FTX exchange co-founder Sam Bankman-Fred, who is now charged with fraud, conspiracy and violating campaign finance laws, among other offenses.
Ironically, the thirty-something’s cool downfall was predicted at the height of the FTX empire in the company’s Super Bowl ad last year by comedian Larry David.
The multi-billion dollar exchange in the Bahamas has been among the largest in the world, successfully positioning itself as a safe and easy way to access cryptocurrency. In the ad, David plays a foil who questions every great technological advance throughout history and naturally rejects cryptocurrencies as well. Ultimately, the message is: “Don’t be like Larry. Don’t miss out on cryptocurrencies, on NFTs, and the next big thing.”
Nine months later, David’s unlikable character will laugh even though David himself has been sued for the ad. In November, a series of revelations and Machiavellian chess moves by FTX’s biggest rival, Binance, led to the collapse of FTX, displacing Bankman-Fried as the leader not only in the digital currency world, but also in the philanthropic niche known as effective altruism.
Here’s a look at the characters and events behind the drama that will continue to unfold for some time.
The main players
Sam Bankman Fried
FTX
Sam Bankman-Fried (often referred to as SBF): Bankman-Fried, the son of two Stanford law professors, founded Alameda Research in 2017, a few years after graduating from MIT. In 2019, he co-founded FTX, which captured an $18 billion cryptocurrency bull market in July 2021, securing investments from the likes of Softbank and Sequoia Capital. Before switching to working on crypto full-time, SBF spent time working at the Charitable Center for Effective Altruism.
He became a leading voice in the EA movement and has publicly vowed to give away the majority of his fortune. He has also been a major presence on Capitol Hill as the second largest donor to Democratic politicians in recent years, testifying before Congress on cryptocurrency and even putting forward his own proposed draft of potential regulations for the industry just last year.
FTX: Short for “Futures Exchange,” FTX was launched from the reputation Alameda Research has built in the industry as one of the largest digital currency exchanges by volume. Its stated focus was derivatives, leveraged trading and a professional approach with the goal of “moving the derivatives space towards becoming institutional grade”. One of the early notable investors was Binance founder and CEO Changpeng Zhao, often known as “CZ.” (For more information, see below.) FTX has operated an international exchange out of the Bahamas. A separate entity, FTX.us, was created in 2020 to provide legal services to clients in the United States. By 2021, FTX has become the second largest crypto exchange after only Binance, worth about $30 billion before it started to crash.
Alameda Research: The business was started in 2017 by SBF and Tara Mac Aulay, who was running the Center for Effective Altruism at the time. The company saw early success in arbitrage the price of bitcoin between different markets. As it grew, it entered into other types of deals and made dozens of investments in crypto projects. This includes a major influence on Solana, a blockchain created by a former Qualcomm engineer to compete with Ethereum. The relationship between Alameda and FTX was a popular topic of speculation before it started leaking late last year.
Quick Facts: I started Alameda Research with Sam in 2017. In April 2018, a group of others and I quit, in part over concerns about risk management and work ethics.
– Tara MacAulay (@Tara_MacAulay) November 16, 2022
Caroline Ellison: The CEO of Alameda Research right up to the break met SBF when they were both working at a Jane Street trading firm. Ellison joined Alameda in 2018 and became its sole CEO in August 2022. She is the daughter of two academics, such as Bankman-Fried, and is He was said to have had an on and off relationship with the SBF.
Binance/CZ: Founded by Changpeng Zhao (CZ), Binance is the world’s largest cryptocurrency exchange by a significant amount after the FTX crash. cz He was one of the first investors in FTXHowever, the relationship soon soured, and he lost his stake in the company It will be sold again in 2021. CZ’s familiarity with FTX and SBF played a pivotal role in triggering the current debacle.
Bankman-Fried, Ellison, and representatives from Binance, FTX, FTX.us, and Alameda did not respond to requests for comment. The telco that represented FTX, FTX.us, and Alameda before their deaths responded that it was no longer working with the companies. No other FTX and FTX.us contacts were listed.
timetable
May-July 2022: A series of cryptocurrencies led by Terra Luna, triggering a wave of bankruptcies among cryptocurrency lenders such as Celsius, BlockFi and Voyager. FTX moves to rescue BlockFi with an option to buy the New Jersey-based company and acquire Voyager’s assets. The investments seem to cement FTX as one of the strongest players in the troubled crypto world.
November 2, 2022: Leaked financial data from Alameda Research It showed that the suspected intimacy between the trading company and FTX is closer than many thought, as a large amount of the trading company’s assets are held in the original FTX token FTT. Basically, billions in Alameda’s worth can be traced back to a cryptocurrency created by sister company FTX. Each FTT token was worth around $25.50 at the time.
November 6: CZ announces that Binance will sell its large FTT holdings. Fifteen minutes later, Ellison replied that Alameda would like to buy the tokens from Binance at $22 each. The price of the token begins to fluctuate almost immediately, dropping as much as 10% and dropping below $22 for periods in the same day.
This was the beginning of the end for FTX.
As part of Binance’s exit from FTX shares last year, Binance received the equivalent of $2.1 billion in cash (BUSD and FTT). Because of recent discoveries that have come to light, we have decided to liquidate any remaining FTT on our books. 1/4
– Czechoslovakia 
Binance (cz_binance) November 6, 2022
November 8: FTT pit price drops below $6, and CZ reveals that Binance has entered into a non-binding agreement to buy FTX outright. Crucially, the acquisition relies on a due diligence examination of FTX’s financial statements.
November 9: Bloomberg reports Federal agencies in the United States are investigating FTX. A Binance spokesperson told reporters: “As a result of corporate due diligence, as well as recent news reports regarding alleged mishandling of client funds and investigations by alleged US agencies, we have decided that we will not pursue the potential acquisition of FTX.com.”
November 10: The SBF announces that Alameda Research will be shutting down. Bahamas regulators freeze FTX assets. Inspired by the principle of effective altruism, all employees of the FTX Future Fund, which has allocated $ 160 million to fund various projects, are resigning.
November 11: FTX, FTX.us, Alameda, and dozens of affiliates File for bankruptcy in the United States. SBF stepped down as CEO and was replaced by John J. Ray III, best known for overseeing the liquidation of Enron. Late in the day, FTX was hacked and more than $300 million was taken off the exchange. FTX advises users to delete its mobile application. SBF blame later “An ex-employee or malware on a former employee’s computer” due to theft.
November 13: Reuters reports It cannot account for at least $1 billion of FTX clients’ funds.
November 15: a A class action lawsuit is being filed in Florida v. FTX and a number of celebrity “brand ambassadors,” including Larry David, Tom Brady, Gisele Bundchen, Kevin O’Leary, Naomi Osaka, Shaquille O’Neal, and Stephen Curry, alleging deception of consumers.
November 16: The US House Committees on Banking and Financial Services announced that they will hold hearings on the implosion of FTX in December. SBF tells Vox Via Twitter DMs, he regrets filing for bankruptcy and still hopes to raise $8 billion to make all FTX customers complete.
NOVEMBER 17: In a bankruptcy court filing, FTX’s new CEO Ray said, “Never in my career have I seen such a complete failure of corporate controls and such complete absence of trustworthy financial information as happened here. From the integrity of compromised systems and flawed regulatory oversight Abroad, to the concentration of control in the hands of a very small group of inexperienced, inexperienced and vulnerable individuals, this situation is unprecedented.
November 21: a deepfake video It appears on Twitter under a fake SBF account with a blue check mark that appears as if Bankman-Fried is telling affected FTX users to go to a website to collect compensation through a crypto giveaway. The scheme is a cryptocurrency scripted scam, but with a disguised fake video as bait.
Over the weekend, an account verified as the founder of FTX SBF posted dozens of versions of this deepfake video offering FTX users “compensation for loss” in a phishing scam intended to drain their crypto wallets. pic.twitter.com/3KoAPRJsya
– Jason Koebler (@jason_koebler) November 21, 2022
November 22: Details of the finances behind the SBF empire begin to emerge as bankruptcy proceedings progress. FTX representatives said they identified $1.4 billion in assets, but cautioned that it could take several more weeks to build a full balance sheet. Meanwhile, the company disclosed that its 50 largest creditors owe it a total of $3.1 billion but did not disclose the names of those creditors. Tax returns also reveal that FTX and Alameda Research lost a combined $3.7 billion between 2019 and 2021, long before the current debacle, suggesting that things weren’t quite as good in the SBF empire as they might seem.
November 30 to December 11: The SBF has implemented a comprehensive information campaign Virtual appearances live At the DealBook conference at the New York Times, on marathon Twitter spaces, cryptic podcasts and grant interviews to a wide range of outlets from major media brands to little-known YouTubers. He consistently paints himself and his actions running FTX as naive at best and negligent at worst, but continues to deny allegations of willful wrongdoing.
“Look, I screwed up,” he told the New York Times on November 30. “I was the CEO of FTX, which means I was in charge. We messed up big.”
December 12: Shortly before he is expected to travel to the United States to testify before Congress, SBF is arrested in the Bahamas after the United States notified the government of that country that it had brought fraud charges against Bankman-Fried and would seek his extradition. The SBF was denied bail and sent to the island nation’s notorious Fox Hill prison.
Dec. 21: Caroline Ellison and FTX co-founder Gary Wang plead guilty to charges including wire fraud, securities fraud, and commodity fraud. SBF continues to maintain its innocence.
December 22nd: SBF is He was released from a Manhattan courthouse to custody of his parents on $250 million bail.
January 3: Bankman Fried is back in court in New York TO He pleaded not guilty.
February 23: An unsealed indictment against SBF Bank reveals that Bankman-Fried faces a few additional charges, including bank fraud and operating an unlicensed money transmitter. He now faces up to 12 counts of various counts in a trial expected to begin in October.
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