Federal prosecutors want Sam Bankman-Fried barred from using Signal
By TMCnet Staff
The FTX the crypto exchange that went from being worth $32 billion to filing for bankruptcy in what many are calling the "Lehman Brothers (News - Alert) Moment" for crypto. Sam Bankman-Fried, the founder of FTX and Alameda Research, became a prominent figure in the crypto space while becoming one of the wealthiest people by the age of 30. The collapse of FTX has shaken up the entire crypto space. This has led to Congress and the SEC (News - Alert) investigating what happened. Here is a step-by-step breakdown of what happened.
The FTX meltdown shook the entire cryptocurrency space, which still had not recovered from the Luna disaster in May, and a long decline in value. Adding insult to injury, in the blink of an eye, FTX went from being worth some $32 billion to filing for bankruptcy, leaving many investors confused to say the least.
With mainstream celebrity endorsements and sponsorships in major sports, there's a strong possibility that you heard about FTX or Sam Bankman-Fried at some point in the last few years. Sam Bankman-Fried, often referred to as SBF, is the 30-year-old founder of FTX, the crypto exchange. He amassed a net worth of $26.5 billion at the peak of his wealth.
With cryptocurrency investing becoming more widely accepted in the last few years, many folks turned to crypto exchanges to purchase different types of cryptocurrency, like bitcoin, ether, luna, solana and matic, to name a few. As crypto became more popular, SBF and FTX did too.
SBF co-founded Alameda Research, a crypto hedge fund named after his hometown, in late 2017. SBF then created his own crypto exchange, FTX, in 2019 based on the success of Alameda. The exchange grew fast with high-profile acquisitions, a hefty marketing budget, and promises of high returns. Users were told that they could earn much higher yields with FTX than with other traditional banks.
SBF became a celebrity in the crypto space as he became a kind of poster boy for crypto. He hired celebrities to endorse FTX, with prominent figures like Tom Brady, Stephen Curry, Shaquille O'Neal and Larry David becoming ambassadors for the exchange. Kevin O'Leary recently admitted that he was paid $15 million to be a spokesperson for the exchange. In a round of funding in January of this year, FTX raised a whopping $400 million to bring the total funding up all the way to $2 billion and the valuation to $32 billion.
It's worth mentioning that FTX became so prominent that they purchased the rights to name the Miami Heat Arena the "FTX Arena." FTX reportedly signed a 19-year deal to rename the Miami arena in June of 2021 for $135 million. At the time, some skeptics weren't sure how a two-year-old company could sign such long-term deals. As one can imagine, the city and the team no longer wish to be associated with a disgraced crypto exchange.
On December 13, 2022, a federal grand jury in Manhattan indicted Samuel Bankman-Fried, aka SBF, on multiple charges, including conspiracy to commit wire fraud, wire fraud, conspiracy to commit commodities fraud, conspiracy to commit securities fraud, conspiracy to commit money laundering, and conspiracy to defraud the Federal Election Commission and commit campaign finance violations. The charges stem from an alleged scheme by Bankman-Fried to misappropriate billions of dollars of customer funds deposited with FTX, the international cryptocurrency exchange he founded, and to deceive investors and lenders to FTX and Alameda Research. Bankman-Fried was arrested in the Bahamas on these charges and is set to appear before a Bahamian magistrate judge. The Justice Department, the FBI, and other agencies are investigating the case, with the assistance of the Securities and Exchange Commission and the Commodity Futures Trading Commission, which have also initiated civil proceedings against Bankman-Fried.
Today, US prosecutors have asked a federal court to impose stricter bail conditions on Sam Bankman-Fried to prevent him from communicating with his former colleagues at FTX. Court documents reveal that the Department of Justice (DOJ) alleges that Bankman-Fried attempted to contact the general counsel of FTX's US arm via Signal and email earlier this month. The DOJ claims that this communication was 'suggestive of an effort to influence Witness-1's potential testimony.' The prosecutors have requested that the judge overseeing Bankman-Fried's criminal case prohibit him from communicating with current and former FTX employees, as well as from using Signal or any other encrypted or ephemeral messaging app. Bankman-Fried's legal team has accused the federal prosecutors of trying to depict their client in the worst possible light and claims that Bankman-Fried was trying to offer assistance, not interfere with the case. They also argue that a Signal ban is unnecessary as Bankman-Fried is not using the app's auto-delete feature.