Crypto exchange FTX is spiraling toward bankruptcy. Its founder, Sam Bankman-Fried, could be facing prison.
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The SEC is investigating whether FTX misused customer funds. From Bloomberg:
The Securities and Exchange Commission and the Commodity Futures Trading Commission are investigating whether the firm properly handled customer funds, as well as its relationship with other parts of Bankman-Fried’s crypto empire, including his trading house Alameda Research, Bloomberg News reported Wednesday. Officials from the Justice Department also are working with SEC attorneys, one of the people said.
This investigation has gone on for months, long before FTX teetered on the edge of insolvency.
At issue is SBF’s numerous interests. He founded the FTX exchange, its American counterpart FTX US, and crypto hedge fund Alameda Research.
FTX may have improperly moved client money between them. SBF could’ve been trying to plug a hole in another part of his empire.
To see how flagrantly illegal this is, let’s use an old economy example. Imagine if Bank of America also had a hedge fund.
When the hedge fund is struggling, Bank of America raids your checking account to make up the difference. See the problem?
If this is true, SBF could be facing years in prison.
With his empire in flames and the feds circling, SBF may go on the lam like Do Kwon, founder of Terra. It would be a stunning turnabout for a man whose net worth was $15 billion on Monday.
What do you think the future holds for FTX and SBF? Leave a comment at the bottom and let me know!
There will be no blog tomorrow in honor of Veteran’s Day. Have a great weekend and see you on Monday! 👋
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Photo: FTX CEO Sam Bankman-Fried
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