FTX cryptocurrency exchange founder and former billionaire, Sam Bankman-Fried or SBF was today sentenced to a 25-year prison sentence by the Manhattan court.
FTX cryptocurrency exchange crisis
SBF got into the cryptocurrency world when he was 25 years old. He initially founded a company called Alameda Research but later got into earning money by using the difference in bitcoin prices in different countries. This strategy is called arbitrary bidding.
He launched FTX in 2019 and initially got many investments due to his high promises and claims. Many people trusted SBF and even companies like Sequoia Capital showed support. The truth started unfolding when several reports started coming up regarding the conflict of interests in his companies.
In early November 2022, CoinDesk, a bitcoin company released a report revealing FTX’s financial balance sheet. Reports of FTX and Alameda Research claiming to be insolvent came up by Dirty Bubble Media because a majority of FTX’s assets were in the form of tokens which were not very liquid. The firm on the other side had 8 billion dollars’ worth of liabilities including 7.4 billion dollars’ worth of loans. So, if the customers came up, the firm wouldn’t be able to pay back.
The FTT stock prices started decreasing and FTX withdrawal started increasing.
In December 2022, the US government charged SBF and his firm’s top executives for misappropriating over 8 billion customer deposits. The lawsuit filed against SBF also claimed that the FTX scheme was a Ponzi scheme where the money invested by new investors was used to pay the old investors.
Sam Bankman-Fried’s Conviction
US District Judge Lewis Kaplan in Manhattan court accused SBF of deceiving customers and dismissed his claim that customers didn’t suffer any loss.
“He knew it was wrong.” Regarded the judge while announcing SBF’s sentence.
In the court, Sam Bankman-Fried offered apologies to all the customers and investors and there are speculations that SBF will appeal against the verdict.
