Who is Sam Bankman-Fried, the crypto king who had a stunning downfall?

Sam Bankman-Fried, who was previously famous for his expertise in cryptocurrency, has been convicted for his involvement in the downfall of the FTX cryptocurrency platform. According to reports, if he receives the harshest punishment, the 31-year-old millionaire-turned-convict will spend the rest of his life in jail.

Bankman-Fried's shocking downfall started about 12 months ago when FTX declared insolvency triggering fear among the crypto community.

This is the important information you should be aware of concerning the past ruler of cryptocurrency.

SBF, who goes by the nickname Bankman-Fried, started his professional journey as a trader for Jane Street Capital after completing his studies in mathematics and physics at MIT. Following his departure from Jane Street in 2017, SBF ventured out on his own to establish a hedge fund for cryptocurrency, which he named Alameda Research. The company's initial headquarters was a North Berkeley, California-based Airbnb, boasting two bedrooms.

Last week, he gave testimony stating that even though they were only three people, they counted the attic as another bedroom.

Even after his initial success, Bankman-Fried's desire to innovate and create did not waver. As a result, he teamed up with other individuals and established the cryptocurrency exchange, FTX. Currently, he holds the position of CEO at FTX.

Bankman-Fried stated on Friday that he had very little knowledge about crypto.

He expressed his complete lack of understanding on their functioning, but was aware that they were objects that could be exchanged.

According to Bankman-Fried, he first thought of selling FTX to Binance - a cryptocurrency exchange, as he had no clarity on how to attract customers.

During his testimony, he stated that he had estimated a slim possibility of about 20% for success and a likelihood of 80% that the organization would fail in just a matter of months. He added that even a 20% opportunity was massive, particularly considering that the leading exchanges of the time were organizations worth billions of dollars.

Bankman-Fried re-employed Caroline Ellison who used to work with him at Jane Street, to work as a trader at Alameda. Eventually, she climbed up the ladder to become the CEO of the firm, and was sometimes romantically involved with Bankman-Fried. However, she was also the most important witness for the prosecution, and testified that she, along with others, committed financial wrongdoings while being directed by Bankman-Fried.

Back in January 2022, FTX was worth $32 billion, while the prices of cryptocurrencies remained at record-breaking levels. Notably, seasoned investors like BlackRock and SoftBank had also invested in the company.

Bankman-Fried relocated the main offices of both businesses from Hong Kong to the Bahamas as the corporate tax rate there is lower than in the United States and the regulatory conditions are more welcoming.

When it occurred, Bankman-Fried praised the Bahamas as "one of the rare locations to create a complete system for cryptocurrency."

7 Fraud & Conspiracy Counts: Guilty Verdict

The company went bankrupt in November 2022 because of a significant amount of net withdrawals, which amounted to billions of dollars. The panic was partly caused by a statement made by the CEO of Binance, one of FTX's competitors, who tweeted that his company would sell its holdings in FTT (FTX's digital currency) because of newly surfaced information.

On Monday, Bankman-Fried testified that he had worries about the situation. He expressed that it was a sign that there could be a rush of people wanting to withdraw their money from the bank, which could ultimately lead to a problem with having enough funds to cover these withdrawals. This is what is known as a liquidity crisis.

After receiving a message, Bankman-Fried published a tweet comforting clients that the FTX assets were secure. However, he ultimately erased the tweet.

Bankman-Fried was apprehended in the Bahamas during December of 2022 following the filing of criminal accusations against him by American prosecutors.

Bankman-Fried was convicted of taking vast amounts of money from the accounts of customers who had invested in his former top-performing crypto platform, FTX. Additionally, he was found guilty of deceitfully obtaining money from those who had lent funds to Alameda Research, a hedge fund associated with FTX. Alameda Research had retained custody of FTX customer funds in a bank account.

Whilst going through his trial, Bankman-Fried revealed that in the year 2020, he became aware that FTX customer funds were being held by Alameda. However, he did not make any moves to protect these funds.

No one was dismissed after he found out in autumn of 2022 that Alameda was indebted to FTX for $8 billion.

Bankman-Fried was convicted of additional offenses, which consist of deceiving investors in FTX, as well as a charge for laundering money.

If he receives the harshest penalty, he may be imprisoned for up to 110 years. However, his trial may not be over yet. He is due to face a second trial for five more charges in March, but the judge urged the prosecutors to make a decision by February 1st on whether or not they will pursue this case.

Bankman-Fried was believed to have a net worth above $15 billion, as per the Bloomberg Billionaire Index, prior to the downfall of FTX.

During November 2022, the worth of FTX's possessions decreased drastically, causing Bankman-Fried's financial status to follow suit. The run on FTX assets resulted in a monumental loss for Bankman-Fried as his net worth plummeted by a staggering 94% in a single day, which happens to be the biggest single-day loss for any individual recorded on the Billionaire Index.

Sam Bankman-Fried's folks, Joe Bankman and Barbara Fried, are esteemed law professors at Stanford University, having achieved tenure.

Bankman is skilled in taxation law, whereas Fried has a proficiency in ethical practices within the legal field.

According to Bankman-Fried, his parents did not have any involvement in the significant actions of FTX. However, a lawsuit that occurred in September has brought them to the forefront of attention. The legal document alleges that Bankman and Fried conversed with their son about transferring a $10 million cash present and a $16.4 million Bahamian property to them.

Bankman and Fried were aware of the warning signs or chose to overlook them, which pointed towards their son and his business associates masterminding a widespread fraudulent operation, as per the legal action taken against them.

According to the legal document, Bankman referred to FTX as a "family-owned enterprise" numerous times. It was mentioned that he started as an informal counselor for the business but eventually transitioned into a salaried staff member.

Furthermore, the legal action asserts that Fried purportedly acted as a consultant to her child, particularly in regard to making contributions to political causes.

Both mom and dad were seen at their son's trial in Manhattan.

He Wooed Politicians And Celebs Pre-arrest

In 2021 and 2022, FTX experienced a significant increase in valuation and popularity, which led to Bankman-Fried's involvement in DC politics. He advocated for the regulation of the cryptocurrency industry and quickly became a prominent figure. In addition, he played a major role in funding the Democratic Party by donating roughly $40 million to campaigns and political action committees, according to Federal Election Commission records.

However, Bankman-Fried didn't only contribute funds to the Democratic party. According to federal prosecutors, he is accused of trying to hide his donations to Republican candidates as well.

Bankman-Fried also made himself popular in the sports and entertainment industries. It is said that FTX paid out $135 million to change the name of the Miami Heat arena to "FTX Arena" in 2021. However, after FTX went bankrupt, Miami Heat cut ties with the company.

The cryptocurrency exchange FTX shelled out large sums of cash to engage former athletes such as Tom Brady, Stephen Curry, and Naomi Osaka as spokespeople in their commercials and publicize their services. In the year 2022, FTX even went as far as to enlist the aid of "Curb Your Enthusiasm" creator Larry David for a Super Bowl advertisement promoting the cryptocurrency platform.

The bankruptcy of Bankman-Fried's cryptocurrency trading company caused a financial ripple effect in the world of digital currency. As soon as FTX experienced a crash, Gemini, a crypto exchange started by Cameron and Tyler Winklevoss, suspended customer redemptions in its lending department, stating market instability as the reason. Eventually, the lending department went bankrupt. Recently, the New York attorney general took legal action against three of the Winklevoss' firms, alleging that they hid over $1 billion in losses.

Only a short time elapsed following the financial collapse of FTX, when yet another cryptocurrency lender, BlockFi, similarly went bankrupt. The business conveyed that it had substantial monetary involvement with FTX and Alameda.

After FTX's decline and the decrease in the value of digital currencies such as bitcoin, Coinbase and Binance also went through significant workforce reduction.