CRYPTO CRASH! Sam Bankman-Fried’s $16 billion assets have plummeted drastically in days.
The world’s second-largest cryptocurrency exchange, FTX, collapsed at the hands of its founder and CEO – Sam Bankman-Fried last week.
Bankman-Fried’s net worth has plummeted from an estimated $26billion to approximately $0 – but will he face jail time for his actions?
Could Sam Bankman-Fried go to jail for the FTX collapse?
As of November 15, 2022, Sam Bankman-Fried has not been arrested, however, people are wondering whether he might be.
Federal prosecutor, Samson Enzer, said: “What this will boil down to is, were there deliberate lies to convince depositors or investors to part with their assets?”
He added, “Were there statements made that were false, and the maker of those statements knew they were false, and made with the intent to deceive the investor?”.
What criminal charges could be taken upon Sam Bankman-Fried?
If it is determined that Bankman-Fried used the customer’s money for a purpose that was not communicated to them prior, this can be the basis of a fraud or embezzlement charge.
It could also be argued that the former FTX CEO intentionally misled customers when he tweeted that SFX was “fine” just a week before its collapse.
This might be particularly important, given that he later deleted his claims.
Reuters also revealed that a back door was written into the code at FTX that allowed Bankman-Fried to move customers’ money from that platform to his own hedge fund, Alameda Research.
It was reported that $1 billion was missing.
If true, this is considered a crime as customer deposits are subject to a myriad of protections and are not allowed to be played with by the CEO.
Why did the FTX collapse?
It is alleged that SBF moved $10 billion of customers’ money into the trading company, Alameda Research and that between $1 billion and $2 billion of that money has vanished.
Then, a rush of customers withdrew their money from FTX and the company was forced to file for bankruptcy.
Rival cryptocurrency exchange Binance then pulled out of their rescue deal.
Bankman-Fried tweeted, taking responsibility for the collapse of his cryptocurrency exchange.
The former FTX CEO wrote: “I’m sorry. That’s the biggest thing. I fucked up, and should have done better.”
He explained that he should have been “communicating more”.
How much money did Sam Bankman-Fried lose?
Following the collapse, Bloomberg Billionaires Index considered Bankman-Fried to have no material wealth.
The outlet described it as “one of history’s greatest-ever destructions of wealth”.
On November 10, 2022, just two days after the collapse, the entire staff of the FTX Future Fund publicly quit.
In a statement, the five-person team wrote that they “have fundamental questions about the legitimacy and integrity of the business operations that were funding the FTX Foundation and the Future Fund”.
A day later, Bankman-Fried issued a series of statements on Twitter amid reports that he was being investigated by the Bahamas Police.
He wrote: “I’m really sorry, again, that we ended up here. Hopefully, things can find a way to recover.
“I was shocked to see things unravel the way they did.”