FTX files for bankruptcy, CEO faces fraud

Mac Lewis, Sports Editor


Founded in 2019 by CEO Sam Bankman-Fried, FTX, known as “Futures Exchange,” hit its peak as a company in 2021. In November of 2022, Bankman-Fried was accused of fraud and arrested on charges. The collapse of FTX has attracted widespread media attention, and Bankman-Fried’s future is unknown.

When Bankman-Fried founded FTX, his goal was to create a digital currency exchange, which is a platform where people can buy and sell digital assets such as Bitcoin. The company rose to popularity as people looked to invest in cryptocurrency. New investors were glad to avoid dealing with the technical side of transactions, and investors were glad to gain the ability to store their cryptocurrency in an online crypto wallet. FTX experienced significant growth during the height of the COVID-19 pandemic, as many found crypto to be an easy way to invest and make money from home. FTX also rose to prosperity and international prominence through a series of high profile acquisitions, including Kraken, Coinbase and Gemini. During this time, investors put forth a whopping $2 billion into the company.

At its peak, the price of Bitcoin shot up from being traded at $10,000 per share to peaking at $64,000 per share. However, by the end of 2021, this had taken a significant turn, as the price of Bitcoin was being traded at $16,000 per share. This sudden drop in price per share brought up suspicion about how true FTX earnings were. In November 2022, a balance sheet of the cryptocurrency investing firm owned by Bankman-Fried and Alameda Research was published by CoinDesk. This publication showed that Alameda owned a digital currency created by FTX known as FTT. The Alameda balance sheet was leaked, and FTX withdrew their assets. The balance sheet was deemed unbalanced, indicating fraud had taken place. The finding brought forth headline worthy news across all platforms, and became one of the biggest company collapses and fraud discoveries of this century.

Bankman-Fried was charged by the Securities Exchange Committee for defrauding investors in the crypto asset trading platform. The company’s recent collapse has led to investors losing billions of dollars, with Bankman-Fried facing charges and FTX filing for bankruptcy.

“Clearly I made a lot of mistakes,” Bankman-Fried said in an interview in late 2022 with Andrew Ross Sorkin of the New York Times. “There are things I would give anything to be able to do over again. I didn’t ever try to commit fraud on anyone. I was excited about the prospects of FTX a month ago. I saw it as a thriving, growing business. I was shocked by what happened this month.”

Bankman-Fried also said he “didn’t knowingly commingle funds” with Alameda Research. He has yet to go to trial, but his court appearance will likely attract widespread media attention.

“At the end of the day, I was CEO of FTX, and that means whatever happened—I had a duty,” Bankman-Fried said in an interview with the New York Times. “I had a duty to all of our stakeholders, to our customers, our creditors. I had a duty to our employees, to our investors and to the regulators of the world to do right by them and make sure the right things happened at the company. And clearly, I did not do a good job with that.”