From prominent figure in the financial world to prison sentence: the decline of the cryptocurrency prodigy

Sam Bankman-Frieda young promise from the world of cryptocurrencies, was sentenced this Thursday to 28 to 25 years in prison after being found guilty of charges related to fraud and money laundering. A conviction that ends up wasting the career of the billionaire behind what became the second largest exchange platform on the planet.

TO LOOK: The mastermind behind the FTX cryptocurrency platform scam confesses his crimes and asks for forgiveness

Bankman-Fried – 32 years old, son of two law professors at Stanford and a graduate in Physics from the prestigious Massachusetts Institute of Technology (MIT) – worked at a company dedicated to stock fund arbitration operations before making the leap to the world. cryptocurrencies in late 2017, when he arrived at the Alameda Research Foundation.

In 2019, at just 27 years old, he founded FTX, a platform aimed at exchanging traditional currencies for the then new cryptocurrencies that was valued at US$32 billion at its peak.

His youth, his scruffy appearance, and his ability to gain the trust of major investors soon led to Sam Bankman-Fried, or SBF as he came to be called, being dubbed the “crypto” child prodigy.

He starred on covers, caught the attention of various media outlets and it wasn’t long before his company was named the new JP Morgan due to its importance in the world of digital currencies.

Bankman-Fried was considered a cryptocurrency prodigy.

2022, however, would be a turning point in SBF’s promising career. That year, the world of cryptocurrencies was shaken by several factors such as delays from the COVID-19 pandemic, inflation, the war in Ukraine and high interest rates.

This led to the downfall of several digital currencies. Amidst the chaos, SBF made the decision to buy and grant loans to the most struggling companies in the sector. Upon learning that a large part of the company’s funds had been committed to risky trading, Changpeng Zhao, CEO of Binance (the world’s largest cryptocurrency exchange), decided to sell his stake in FTX and publicly expressed his concerns about the platform’s stability. .

The result was catastrophic.

Thousands of investors immediately requested to withdraw their funds from FTX, leading the platform to record a deficit of almost 9 billion dollars and to have to declare bankruptcy shortly afterwards.

In 2022, FTX plummeted after a crisis of confidence due to investment in hedge funds. (Andrei Rudakov/)

In a short time, SBF went from the top of the pyramid to sink into the deepest abyss. His arrest was not long in coming and, in November 2023, the young businessman was found guilty by a New York jury of seven crimes, including several counts of fraud and money laundering.

The maximum sentence he faced for these charges exceeded 100 years in prison. The prosecution demanded between 40 and 50 years, while the defense requested that the sentence be limited to between 5 years and 6 and a half years, ensuring that the SBF intends to return the defrauded money to those affected.

To gain leniency from the judge, the lawyers also mentioned that SBF suffered from autism spectrum disorder, which makes him “vulnerable within the prison population”.

Finally, after five weeks of hearings, this week Judge Lewis Kaplan, who presided over the month-long trial in November and who also oversaw the case between writer E. Jean Carroll and former US President Donald Trump, sentenced the SBF to 25 years in prison.

Bankman-Fried addressed the court to say she regrets what happened and that there were things she “should have done and things she shouldn’t have done.”

The young man also admitted that he took “a series of bad decisions”As CEO of FTX and even praised his former business partners, such as co-founder Gary Wang and his ex-girlfriend Caroline Ellison. Both testified during the trial against Bankman-Fried and provided detailed evidence of the defendant’s primary role in the fraud.

As for the victims, who number in the millions, they managed to recover around 6.4 billion dollars through group liquidators who plan to reimburse affected customers. FTX further stated that it expects to settle and refund customers “in its entirety”.

Source: Elcomercio