Bitcoin News
Latest Crypto from multi News Outlets
  • bitcoinBitcoin (BTC) $ 23,011.00 0.8%
  • ethereumEthereum (ETH) $ 1,573.83 1.95%
  • tetherTether (USDT) $ 1.00 0.01%
  • usd-coinUSD Coin (USDC) $ 1.00 0.04%
  • bnbBNB (BNB) $ 306.23 0.89%
  • xrpXRP (XRP) $ 0.410104 0.49%
  • binance-usdBinance USD (BUSD) $ 1.00 0.17%
  • cardanoCardano (ADA) $ 0.383934 0.05%
  • dogecoinDogecoin (DOGE) $ 0.088270 1.46%
  • matic-networkPolygon (MATIC) $ 1.14 3.14%
  • okbOKB (OKB) $ 39.05 7.44%
  • solanaSolana (SOL) $ 24.01 1.71%
  • staked-etherLido Staked Ether (STETH) $ 1,572.09 1.88%
  • polkadotPolkadot (DOT) $ 6.39 1.69%
  • shiba-inuShiba Inu (SHIB) $ 0.000012 0.5%
  • avalanche-2Avalanche (AVAX) $ 20.84 11%
  • litecoinLitecoin (LTC) $ 88.13 0.23%
  • tronTRON (TRX) $ 0.063012 0.98%
  • daiDai (DAI) $ 0.999581 0.1%
  • uniswapUniswap (UNI) $ 6.62 2.97%
  • wrapped-bitcoinWrapped Bitcoin (WBTC) $ 22,959.00 0.72%
  • cosmosCosmos Hub (ATOM) $ 13.18 0.64%
  • the-open-networkToncoin (TON) $ 2.51 1.16%
  • chainlinkChainlink (LINK) $ 7.21 2.76%
  • leo-tokenLEO Token (LEO) $ 3.78 1.31%
  • moneroMonero (XMR) $ 182.80 2.25%
  • ethereum-classicEthereum Classic (ETC) $ 21.72 1.34%
  • aptosAptos (APT) $ 17.81 1.86%
  • bitcoin-cashBitcoin Cash (BCH) $ 132.58 2.23%
  • stellarStellar (XLM) $ 0.092895 0.09%
  • apecoinApeCoin (APE) $ 5.98 5.48%
  • quant-networkQuant (QNT) $ 147.85 3.01%
  • nearNEAR Protocol (NEAR) $ 2.47 2.21%
  • crypto-com-chainCronos (CRO) $ 0.080846 0.96%
  • filecoinFilecoin (FIL) $ 5.27 2.79%
  • lido-daoLido DAO (LDO) $ 2.27 4.99%
  • algorandAlgorand (ALGO) $ 0.257310 0.2%
  • vechainVeChain (VET) $ 0.024036 2.31%
  • hedera-hashgraphHedera (HBAR) $ 0.067161 4.46%
  • internet-computerInternet Computer (ICP) $ 5.95 2.61%
  • axie-infinityAxie Infinity (AXS) $ 11.34 1.63%
  • decentralandDecentraland (MANA) $ 0.715726 4.19%
  • aaveAave (AAVE) $ 83.99 3.56%
  • eosEOS (EOS) $ 1.09 2.11%
  • the-sandboxThe Sandbox (SAND) $ 0.743826 0.59%
  • fantomFantom (FTM) $ 0.449264 5.49%
  • elrond-erd-2MultiversX (EGLD) $ 44.61 0.16%
  • flowFlow (FLOW) $ 1.06 3.66%
  • theta-tokenTheta Network (THETA) $ 1.08 4.12%
  • terra-lunaTerra Luna Classic (LUNC) $ 0.000175 0.98%

After FTX collapse, Sam Bankman-Fried arrested: What went wrong with the crypto giant?


The FTX saga added one more chapter after Sam Bankman-Fried, who founded and led FTX until it filed for bankruptcy last month, was arrested in The Bahamas. The Southern District of New York, investigating the case, confirmed his arrest on Twitter on Monday.

“Earlier this evening, Bahamian authorities arrested Samuel Bankman-Fried at the request of the US government, based on a sealed indictment filed by the SDNY,” wrote US attorney Damian Williams. “We expect to move to unseal the indictment in the morning and will have more to say at that time.

While it is not yet clear what the charges against the 30-year-old are, a source told the New York Times that the charges against Bankman-Fried included wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy and money laundering.

So what happened?  What went wrong? And what does this mean for the crypto world?

Let’s take a closer look:

FTX’s incredible rise

The company was founded by Bankman-Fried, an ex-Wall Street trader and former Google employee Gary Want in 2019.

The company witnessed incredible growth since the very beginning, attracting huge investments from Silicon Valley bigwigs.

Bankman-Fried, an MIT graduate and the son of Stanford University professors, was known to play the video game “League of Legends” during meetings.

His influence as the king of crypto had begun starting to pour into political and popular culture – he’d pledged to donate $1 billion toward Democrats this election cycle — his actual donations were in the tens of millions — and prominent politicians like Bill Clinton were invited to speak at FTX conferences.

His company had inked deals with the F1 racing team Mercedes and purchasing the naming rights to the Miami Heat’s home court. Football star Tom Brady invested in FTX.

FTX and Bankman-Fried, as well as his brother, were also early investors in Semafor, the high-profile news start-up run by former BuzzFeed editor-in-chief and New York Times columnist Ben Smith.

Bankman-Fried could do no wrong – Sequoia Capital, which invested in Apple, Cisco, Google, Airbnb and YouTube, described their meeting with Bankman-Fried as likely “talking to the world’s first trillionaire”.

Several of Sequoia’s partners became enthusiastic about Bankman-Fried following a Zoom meeting in 2021. After several more meetings, Sequoia decided to invest in the company.

Adam Fisher, a business journalist who wrote a profile of Bankman-Fried for the firm, referring to Bankman-Fried by his popular online moniker SBF, wrote,  “I don’t know how I know, I just do. SBF is a winner.

Bankman-Fried was seen as a white knight for the industry.

Whenever the crypto industry had one of its crises, Bankman-Fried was the person likely to fly in with a rescue plan. When online trading platform Robinhood was in financial straits earlier this year — collateral damage from the decline in stock and crypto prices — Bankman-Fried jumped in to buy a stake in the company as a sign of support.

When Bankman-Fried bought up the assets of bankrupt crypto firm Voyager Digital for $1.4 billion this summer, it brought a sense of relief to Voyager account holders, whose assets has been frozen since its own failure.

Bankman-Fried could do no wrong – until now.

The spectacular fall

FTX had agreed earlier this week to sell itself to bigger rival Binance after experiencing the cryptocurrency equivalent of a bank run.

Customers fled the exchange after becoming concerned about whether FTX had sufficient capital.

After FTX collapse Sam BankmanFried arrested What went wrong with the crypto giant

Sam Bankman-Fried could do no wrong — until now. Graphic: Pranay Bhardwaj

Doubts had already been growing about the financial stability of FTX, despite Bankman-Fried’s good standing in Washington as a public face of crypto investing.

Attention had focused on the relationship between FTX and Alameda Research, a trading house also owned by Bankman-Fried that was taken down from the internet.

Specialist media site CoinDesk reported that 40 per cent of Alameda’s balance sheet comprised FTX’s FTT tokens.

That raised eyebrows among crypto experts as a potential conflict of interest.

Media reports suggest FTX had needed to find about $8 billion to plug a massive hole in its finances and escape bankruptcy.

It was Binance CEO Changpeng Zha who helped kickstart the withdrawals that doomed FTX when he said Binance would sell its holdings in FTX’s crypto token FTT.

The feud between the two billionaires spilled out onto Twitter, where Zhao and Bankman-Fried collectively commanded millions of followers.

“What a s(asterisk)(asterisk)t show … and it’s going to be crypto’s fault (instead of one guys’s fault),” Zhao wrote on Twitter.

The final straw came when Binance axed its FTX takeover deal citing recent press reports about mismanagement of client funds and investigations by US regulators.

The crypto world had hoped that Binance, the world’s largest crypto exchange, might be able to rescue FTX and its depositors. However, after Binance took a look at FTX’s books, it concluded that the smaller exchange’s problems were too big to solve and backed out of the deal.

Bankman-Fried issued a “sincere” apology, adding FTX would do “everything we can to raise liquidity.”

A day later, FTX filed for bankruptcy in the United States and Bankman-Fried resigned as CEO.

FTX Group announced in a statement that it filed for Chapter 11 bankruptcy proceedings, adding it has begun an “orderly process to review and monetize assets for the benefit of all global stakeholders.”

Chapter 11 is a US mechanism allowing a company to restructure its debts under court supervision while continuing to operate.

The cash-strapped company then appointed John J Ray as chief executive with immediate effect.

John Ray III is a long-time bankruptcy litigator who is best known for having to clean up the mess made after the collapse of Enron.

“The immediate relief of Chapter 11 is appropriate to provide the FTX Group the opportunity to assess its situation,” said Ray in the statement.

“Stakeholders should understand that events have been fast-moving and the new team is engaged only recently.”

“Many employees of the FTX Group in various countries are expected to continue with the FTX Group and assist Mr Ray and independent professionals in its operations during the Chapter 11 proceedings,” the statement said.

What happens next?

Bankman-Fried and his company are under investigation by the Department of Justice and the Securities and Exchange Commission. The investigations likely center on the possibility that the firm may have used customers’ deposits to fund bets at Bankman-Fried’s hedge fund, Alameda Research, a violation of US securities law.

FTX’s bankruptcy is certainly to be one of the most complicated bankruptcy cases in years.

The company listed more than 100,000 creditors on its filing, and with all of its customers effectively being creditors because they deposited their funds with FTX, it will take months to sort out who is owed what, bankruptcy lawyers said. Cryptocurrencies have no protections under law, and politicians on both sides of the aisle issued statements opposing any Lehman Brothers-like bailout for crypto investors.

“Unlike a case where there’s (securities insurance in the failure of a brokerage) or where the FDIC steps in with a bank failure, these customers are totally exposed,” said Daniel Besikof, a partner at Loeb & Loeb LLP who specializes in bankruptcy law.

The stunning collapse of this nascent empire has sent tsunami-like waves through the cryptocurrency industry, which has seen a fair share of volatility and turmoil this year, including a sharp decline in price for bitcoin and other digital assets. For some, the events are reminiscent of the domino-like failures of Wall Street firms during the 2008 financial crisis, particularly now that supposedly healthy firms like FTX are failing.

The total market value of all digital currencies dropped by about $150 billion in the last week, according to CoinMarketCap.com.

After FTX collapse Sam BankmanFried arrested What went wrong with the crypto giant

The crypto exchange came under scrutiny with some alleging rampant nepotism and conflict of interest. AP

One venture capital fund wrote down investments in FTX worth over $200 million. The cryptocurrency lender BlockFi paused client withdrawals Friday after FTX sought bankruptcy protection. The Singapore-based exchange Crypto.com saw withdrawals increase this weekend for internal reasons but some of the action could be attributed to raw nerves from FTX.

The ultimate impact of FTX’s bankruptcy on the crypto industry is uncertain, but billions of dollars of wealth have already been destroyed.

Zhao defended himself against accusations of any purposeful plot after the deal fell apart.

“FTX going down is not good for anyone in the industry. Do not view it as a win for us. User confidence is severely shaken,” he tweeted.

“This is the direct result of a rogue actor breaking every single basic rule of fiscal responsibility,” said Patrick Hillman, chief strategy officer at Binance.

Already, other crypto currencies such as bitcoin and ether have tumbled to the tune of $60 billion in the market, as per Wired.

SOL, the Solana network token, fell by more than 50 per cent between 7 and 9 December.

While Bankman-Fried hopes customers will recover their funds, this is unlikely.

CoinDesk on 9 November reported buyers on Telegram are bidding $0.10 to $0.15 cents on the dollar for funds tied up in FTX, gambling on the chance they may eventually be released.

Investors are unlikely to recover their money, Aaron Kaplan, a securities attorney and co-CEO of trading platform Prometheum, told Wired.

“The facts will come out in time. What is clear at this present moment is that FTX was taking advantage of a gray area at the heart of which was the expectation of profit, irrespective of the best interest of customers.”

However, the collapse of FTX could lead to the industry being subject to more regulation.

Ironically, Bankman-Fried, who was operating FTX out of US jurisdiction from his headquarters in The Bahamas, had been increasingly vocal about the need for more regulation of the cryptocurrency industry.

Though many supporters of crypto oppose government oversight, FTX’s collapse may have helped make the case for stricter regulation.

“This is another black eye for the industry,” David Holt, a cryptocurrency industry expert at CFRA, said of FTX’s troubles.

“I care because it’s retail investors who suffer the most, and because too many people still wrongly associate bitcoin with the scammy ‘crypto’ space,” said Cory Klippsten, CEO of Swan Bitcoin, who for months raised concerns about FTX’s business model.

Klippsten is publicly enthusiastic about bitcoin but has long had deep scepticism about other parts of the crypto universe.

With inputs from agencies

Read all the Latest NewsTrending NewsCricket NewsBollywood News,



Read More:
After FTX collapse, Sam Bankman-Fried arrested: What went wrong with the crypto giant?

Disclaimer:The information provided on this website does not constitute investment advice, financial advice, trading advice, or any other sort of advice and you should not treat any of the website’s content as such. NewsOfBitcoin.com does not recommend that any cryptocurrency should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions.

Leave A Reply

Your email address will not be published.