The ultimate guide to the dramatic fall of Sam Bankman-Fried, Caroline Ellison and FTX

Sam Bankman-Fried is expected to file an appeal on Tuesday.David Dee Delgado/Getty Images

  • Sam Bankman-Fried has faced criminal charges and is expected to appeal on January 3.

  • The dramatic arrest of the founder of FTX in the Bahamas followed a bizarre media tour and damning court filings.

  • Here’s your guide to everything that’s happened in the FTX saga so far.

In just a few years since founding cryptocurrency exchange FTX in 2019, Sam Bankman-Fried has built a respectful audience among the US political and financial establishment.

Then everything collapsed.

Often dressed as if he had just returned from a game of squash, the 30-year-old former crypto billionaire appeared alongside Bill Clinton and the Davos elite evangelizing the future of cryptocurrencies.

FTX represented a new type of exchange that promised traders a safe and efficient way to trade around various cryptocurrencies. This vision and client growth attracted investments from top VCs such as Sequoia Capital, Tiger Global and SoftBank, helping the company quickly reach a staggering $32 billion valuation. According to Bloomberg, the value of Bankman-Fried was once pegged at around $20 billion.

With approximately $8 billion of customer funds apparently missing, financial regulators claimed that what happened at FTX was not some novel and complex financial engineering, but simple and bold fraud along with simple mismanagement.

Bankman-Fried, with the obliging support of his lieutenants, sent FTX client funds to his other company, Alameda Research, which allegedly squandered the reward on risky investments and also served as his “personal piggy bank”, according to the U.S. Securities and Exchange Commission.

Federal prosecutors in Manhattan also ensnared Bankman-Fried, which turned out to be a collaboration between his ex-girlfriend and former Alameda CEO Caroline Ellison and former FTX co-founder Gary Wang. All three face serious criminal charges for fraud and conspiracy.

The Bankman-Fried project was also about cultivating a sense of legitimacy and ethics around the theoretically lucrative and virtually unsupervised scheme that is cryptocurrency. He was a rare CEO in an industry who actively sought regulation as part of the mainstreaming of the informal economy, where lack of oversight was central to its appeal.

He established himself as a generous donor, mostly to Democratic candidates. Celebrities such as Larry David and Gisele Bündchen flocked to his cause, fueling hype, including an embarrassing Superbowl ad that became the subject of an ongoing lawsuit by investors.

The demise of Bankman-Fried and the implosion of FTX happened so quickly that you may have missed some of the saga’s most surprising details. We’ve weaved them all together so you can meet some of the key figures in the story of FTX’s demise, dizzying investigations, and litany of allegations so far:

Sam Bankman-Fried

An MIT physics graduate who dozed in beanbag chairs in the FTX office, played video games at promotional meetings, and his work attire consisted of sneakers paired with white calf-length socks and T-shirts seemingly fresh from the dryer, Bankman-Fried designed a casual an aesthetic that seemed to define a new kind of tech billionaire.

He also promoted the image of a demanding and all-consuming work environment in his companies, even claiming towards the end that his problem may have been working just 13 hours a day, less than the normal 18 hours.

His Bahamas venture later drew attention to the people who run it and their relationship with each other, with Coindesk reporting that a “gang of kids” was behind the venture.

In the weeks before his arrest, he made multiple rounds with the media – astonishing observers and perhaps his own lawyers at the time – to explain his side of the story, which amounted to admitting that his companies did not have internal oversight that investors believed they did.

He even planned to testify before a House of Representatives panel, but was arrested in the Bahamas the night before the trial.

Read Insider’s report on Bankman-Fried:

FTX founder Sam Bankman-Fried is up to 4 hours of sleep and multitasking on 6 screens. Insiders explain who the 29-year-old crypto billionaire really is – and the tough questions facing his company.

Mr. Crypto is going to Washington

The rise and fall of FTX’s Sam Bankman-Fried went from crypto billionaire to arrest and fraud charge

Sam Bankman-Fried’s FTX saga keeps getting weirder as new details shed further light on just how much his companies’ finances overlapped

Joseph Bankman and Barbara Fried

Barbara Fried and Joseph Bankman are Stanford law professors whose Palo Alto home is both a sanctuary for their son, who is currently out on bail of $250 million, and a security for a sum they didn’t really have to pay. This means that if he escapes, they could lose their home and potentially be on the hook for some of that multi-million dollar sum.

Regulators have also claimed that his parents may have benefited from the scheme, although they are not named as defendants. “Bankman-Fried also used mixed funds from Alameda to make large political donations and buy tens of millions of dollars in Bahamas real estate for himself, his parents and other FTX executives,” the SEC said in its complaint.

Read Insider’s account of Bankman-Fried’s parents:

Sam Bankman-Fried’s parents, law professors, stayed close to their son through the fallout of FTX. Here’s what we know about them.

Reportedly, Sam Bankman-Fried’s parents are with him in the Bahamas, and his father has moved the Stanford law class he was supposed to teach to next quarter

Sam Bankman-Fried’s parents were at his hearing in the Bahamas, and his mother laughed during the proceedings, says report

Sam Bankman-Fried’s mother arrives for a bail hearing in New York

Carolina Elison

The daughter of MIT professors, Ellison was known from an early age as a math genius and met Bankman-Fried at the Jane Street Trading Firm. Bankman-Fried said they used to date.

Now charged with seven criminal charges, Ellison has pleaded guilty and expressed remorse before the New York federal court that presides over the criminal cases involving Bankman-Fried. As head of Alameda, Ellison allegedly helped the company borrow “billions of dollars” by using the illusory FTT token FTX as leverage, the SEC claims.

Read Insider’s coverage of Caroline Ellison:

Caroline Ellison is the math whiz, trader and shadow figure behind FTX’s downfall – here’s how a dedicated Harry Potter fan took part in the biggest cryptocurrency implosion

Caroline Ellison said she grew up “in touch with the economy”. Here’s everything we know about her MIT economist parents.

Sam Bankman-Fried is in prison, but lawyers are wondering: where is Caroline Ellison’s ex-girlfriend?

Caroline Ellison reportedly told the court, “I knew it was wrong.” Here’s what could be next for the former crypto boss and ex-SBF girlfriend.

Gary Wang

Regulators similarly accused Wang, who also separately pleaded guilty to his own criminal charges, of facilitating a scheme that sent FTX funds to Alameda. They claimed that he helped create the code that created this channel to drain FTX funds and that he took $200,000 of the company’s money “for his own purposes”.

Read Insider’s coverage of Gary Wang:

Gary Wang, the mysterious co-founder of FTX, pleaded guilty to fraud charges. Here’s what we know about the key player in the fallen crypto empire.

John J. Ray III

John J. Ray III had chosen words for FTX when he took over as CEO to steer the surprise bankruptcy filing in November. A restructuring expert known for helping maximize recovery for creditors of failed companies like Enron told a Delaware bankruptcy court that there was a virtually unprecedented “total lack of corporate control” at FTX.

Read Insider’s account of John Ray:

The future of FTX and Sam Bankman-Fried is now in the hands of these two lawyers who worked for Enron and Michael Milken

New FTX CEO John Ray Makes $1,300 an Hour to Clean Up Sam Bankman-Fried’s Fallen Crypto Empire

Read the explosive bankruptcy filing where FTX’s new CEO summoned Sam Bankman-Fried

FTX’s New CEO Accuses Failed Cryptocurrency Exchange Of Fraudulent ‘Old School’ That Was ‘Not Sophisticated At All’

What happened

FTX filed for Chapter 11 restructuring in Delaware in November, after fellow cryptocurrency exchange Binance dropped its plan for a potential acquisition. The submission set off a series of events leading to the dramatic capture of Bankman-Fried in the Bahamas.

As US investigators closed down, current FTX CEO Ray described the company as having few, if any, internal protocols for basic accounting and management. For example, he said employee expenses were sometimes approved with emojis and the company used the accounting tool Quickbooks, an odd choice for a large company.

But Bankman-Fried continued to maintain a public profile, presenting himself as an open book, eager to discuss FTX’s demise and the mistakes that led to it.

In a turbulent week in December, Bankman-Fried was arrested in the Bahamas, held at Fox Hill Prison there, and extradited to New York.

Read Insider’s coverage of the FTX saga so far:

FTX Files For Bankruptcy And Sam Bankman-Fried Resigns As CEO After Cryptocurrency Exchange Failed To Secure Bailout

The collapse of the crypto company FTX and its superstar founder explained to those who know nothing about crypto

Liberal PACs and charities that received $260 million from FTX and its management may be forced to give it all away

Lawyers guided us through the process of filing for FTX bankruptcy. It’s really bad.

Bankman-Fried himself faced 8 criminal charges, including fraud and conspiracy to allegedly ‘misappropriate’ FTX client funds

The SEC indicted Sam Bankman-Fried and accused him of “organizing a massive, years-long fraud”

Criminal charges against Sam Bankman-Fried carry hefty fines and jail if proven, legal experts say

Read the CFTC complaint against Sam Bankman-Fried of FTX and his associates Caroline Ellison and Gary Wang

Charges against Caroline Ellison, SBF and FTX co-founder Gary Wang – in 60 seconds

Read the original article in Business Insider

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