The rise and fall of FTX and SBF: The ‘crypto king’ is facing 110 years in prison
I’m sure you’ve seen the headline — 110 years. That’s how much time fallen crypto king Sam Bankman-Fried could spend in prison. After a month-long trial, the FTX founder was just found guilty of seven counts, all revolving around $8 billion the crypto exchange stole from users.
Flashback to 2021, and SBF’s company was trading $20 billion in crypto daily, naming stadiums, buying mansions in the Bahamas and taking out Super Bowl commercials. What went wrong? Short answer: Everything.
Now, he’s in the same conversation as Bernie Madoff. This is so fascinating that I wanted to take you down the winding road of the biggest crypto mess we’ve seen yet.
“Kim, I don’t know anything about crypto”
That’s OK. The big question the jury had to decide on was simple — no knowledge of blockchain, wallets or keys required. Did SBF, now 31, intentionally trick customers and use all the money they invested as his own? The answer (which you know will be challenged in an appeal) is yes.
$26.5 billion
That’s how much SBF was worth when his crypto trading platform peaked. I bet even before the trial, you saw him — a guy with a big mop of curly hair who wore sneakers and a sloppy suit to testify before Congress.
The MIT graduate co-founded FTX (short for Futures Exchange) in 2019. By July 2021, it had an $18 billion valuation and investments from Softbank, Sequoia Capital and other big hitters. It only grew from there.
Remember the Super Bowl commercials with Larry David? That was FTX. (His parents are apparently huge fans.) The company was shelling out money in the Bahamas, too, where it set up its official headquarters.
SBF bought a $35 million penthouse he shared with nine people. All told, FTX spent $256.3 million to buy and maintain 35 different properties.
Spoiler: It didn’t end well
While FTX was raking in money, it was cozying up to trading firm Alameda Research. SBF had an on-again, off-again thing with the CEO, Caroline Ellison. Seriously, this thing is like a soap opera.
A little suspicion from leaders in the crypto world was all it took to start a cascade that left FTX trying to explain where $8 billion in customer money went.
SFB’s defense essentially boiled down to, “Oops, I didn’t mean to.” That didn’t fly. Here’s what led to that guilty verdict:
- Allegedly, he redirected billions from FTX to his hedge fund, Alameda Research. Super illegal, folks.
- Where’d it all go? Those billions propped up loans and a luxury lifestyle, and funded U.S. political campaigns. Makes sense, right? They were desperate for crypto-friendly legislation.
- The protections — for investors, customers and billions of dollars — just weren’t there.
- Several former colleagues-turned-witnesses testified that he knew exactly what was happening behind the scenes.
Sentencing is set for late March, but no, no, it’s not over. There’s a second round of charges, including foreign bribery and bank fraud conspiracies, coming up.
Talk about a cautionary tale
I feel awful for the people who lost it all. Crypto was huge in 2020 and 2021, and FTX was so hyped up you couldn’t turn around without seeing it somewhere.
This really drives home an important point for all of us: The rules of fair play apply in the virtual world just like they do in the physical one. As for those who attempt to bend them? Justice might just be a click away.
⚖️ I bet you know someone who’s seen the headlines but has no idea what this case is all about. Share this story with them so they are in the know.
Tags: Blockchain, fraud, home, luxury, play, prison, trial
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