Sam Bankman-Fried was arrested last Monday in the Bahamas. Bankman was the co-founder and CEO of the collapsed crypto exchange FTX. Because he is currently under criminal investigation, there is a good chance he will be extradited to the United States. But who exactly is he?
The New York Times writes that Bankman is suspected of fraud, money laundering and conspiracy. However, prosecutors later reveal exactly what the man is suspected of. Bankman-Fried insists there was no intent and that these problems arose from messy finances.
Who is crypto-king Sam Bankman-Fried?
Sam Bankman wasn’t born a crypto-king, of course. He started as a normal trader at Jane Street Capital in 2014, where he discovered bitcoin three years later. At the time, it was worth about $10,000. The infrastructure was virtually non-existent, so the tech billionaire saw opportunity in the market.
Bitcoin (Image: Pexels / Alesia Kozik)
He invested in Bitcoin himself, often selling the currency at a ten percent profit. Soon after, he founded two companies: Alameda Research (a quantitative trading company) and, of course, FTX (that happened in 2019). With the money he made through Alameda, he gave FTX a big kickstart.
Big money worth, big crisis
At its peak, Sam Bankman’s FTX was worth roughly $32 billion. When the stock market crashed in November, it was one of the biggest lots on which people traded their digital coins. But shortly thereafter, then, liquidity problems arose, due to messy finances.
As a result, users pulled their money away from FTX; think of this as a kind of digital bank run. Users then no longer trust the party and remove their money before it is too late. But for a bank, or crypto trading platform, this is a death blow. As of last November 11, the outfit is completely bankrupt.
