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User:MarioMario456/FTX: Difference between revisions
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Revision as of 12:36, 15 December 2022
FTX was a crypto exchange (the second largest exchange, behind Binance) run by Sam Bankman-Fried✡ (SBF), a Jewish-American League of Legends player living in the Bahamas. Founded in 2019, it managed to scam investors out of billions of dollars; before suddenly filing for Chapter 11 bankruptcy on November 11, 2022. With a really rapid collapse happening almost overnight, detectives started to investigate the real cause of the bankruptcy.
Spoiler alert: it was fraud.
What Was Actually Going On
The Collapse
On November 6, 2022, Changpeng Zhao, CEO of Binance, announced that Binance was liquidating its entire stock of FTT due to "recent revelations". Soon after, investors rushed to withdraw their FTT; causing the value of FTT to crash. Because FTX's main investment was FTT, this also caused FTX to crash. Hard.
With FTX crashing and burning, Binance pursued an acquisition of FTX; but after finding out they were beyond repair, the offer was cancelled. On November 11, 2022, FTX, Alameda Research and related entities all filed for Chapter 11 bankruptcy. Sam stepped down as CEO and was replaced by John Ray III, an expert at restructuring who also became Enron's CEO post-bankruptcy.
SBF Gets Arrested
About a month after the collapse, the American government ordered John Ray III (FTX's new CEO post-bankruptcy) and Sam to testify about the fall of FTX. Soon after, Bahamian authorities arrested Sam; who is currently being extradited to the US in order to testify.
If Sam is found guilty, he could be facing 115 years in prison; which is effectively a life sentence, just like Bernie Madoff's.
