Weeks after the $32 billion implosion of his now-bankrupt cryptocurrency exchange FTX – far longer than Bernie Madoff was afforded for similar antics/investor fraud – disgraced finance “wunderkind” Sam Bankman-Fried has reportedly been arrested in the Bahamas.
Not only does this represent the first tangible action regulators have undertaken to hold the former billionaire accountable, according to CNBC, it sets the stage for both extradition and US trial.
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Bahamian Prime Minister Philip Davis expressed via statement: “The Bahamas and the United States have a shared interest in holding accountable all individuals associated with FTX who may have betrayed the public trust and broken the law.”
“While the United States is pursuing criminal charges against SBF individually, the Bahamas will continue its own regulatory and criminal investigations into the collapse of FTX, with the continued cooperation of its law enforcement and regulatory partners in the United States and elsewhere.”
The entire FTX saga is an endlessly fascinating tale that requires a writer far more talented than I to adequately explain. But the broad strokes of the timeline are essentially as follows…
- FTX is founded in 2019 and achieves a multi-billion-dollar valuation in relatively no time ($32 billion at its peak: January 2022)
- Binance CEO Changpeng Zhao acquires 20% stake in FTX; at this stage, CZ and Sam Bankman-Fried are on friendly terms.
- Due to a falling out between SBF and CZ, the latter cashes out around mid-2021 but takes FTX’s native token FTT instead of cash.
- Last week, after months of back and forth between the friends turned bitter rivals – the bulk of which involves SBF’s considerable political sway and regulatory crackdowns – CZ dumps $580 million worth of FTT, causing widespread panic.
- FTX encounters what’s known as a “liquidity crunch”; struggles to accommodate the sudden demand for withdrawals from investors.
- Sam Bankman-Fried loses both billionaire status and 94% of his net worth in a single day, later sliding even further from a peak of $16 billion to owing around $600 million.
[Note: For a brilliant and easy-to-follow explanation detailing how Binance and CZ pretty much dismantled FTX, head over to the article recently published by Fortune here.]
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- Around the same time, it’s revealed that SBF has allegedly been misappropriating billions of FTX customers’ dollars to sister organisation Alameda Research – helmed by ex-girlfriend and one of his polyamorous partners Caroline Ellison – where he was regularly making bets he couldn’t cover.
- Just to add some more flavour, Caroline Ellison has publicly admitted to regular amphetamine use via Twitter, which she claims “makes you appreciate how dumb a lot of normal, non-medicated human experience is” (Lmao).
- Bankman-Fried is replaced as FTX’s CEO by John J Ray III, an American lawyer who oversaw the liquidation of Enron – the Texas energy company that famously collapsed circa 2001 after massive financial fraud was exposed (Double Lmao).
- The Royal Bahamas Police Force, US Attorney for the Southern District of New York, US Securities & Exchange Commission, as well as the US Department of Justice all currently have open investigations on FTX.
- Sam Bankman-Fried is arrested in the Bahamas [12/12/2022 Update]
RELATED: Bill Gates Calls Bullshit On Crypto & NFTs (Again)
Incidentally, Sam Bankman-Fried is currently being represented by Bernie Madoff’s own lawyer, Ira Sorkin, as well as Mark Cohen — a former federal prosecutor and partner at Cohen & Gresser who previously defended British socialite/convicted sex offender Ghislaine Maxwell, as well as Sinaloa Cartel leader Joaquín “El Chapo” Guzmán. Triple Lmao.
This Michael Lewis book/eventual movie adaptation is going to be nuts, to say the least.
In the meantime, enjoy finance bro legend Martin Shkreli hilariously reassuring Sam Bankman-Fried prison “isn’t the worst thing ever” above.
