Sam Bankman-Fried, or SBF, is a 30-year-old American at the center of the biggest financial scandal in recent history. But what is FTX and what do quarterback Tom Brady and tennis player Naomi Osaka do in this story? Here’s what you need to know.
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He has been compared to Warren Buffett. He interacted with models, star athletes and world leaders. He testified before the United States Congress demanding additional financial regulations.
And he lost it all, both personally and for at least 100,000 of his clients, in less than 10 days. There is an 11-figure sum at stake, that is, 10 billion US dollars.
The ease with which Sam Bankman-Fried maneuvered from founding his site to buy, resell, and exchange cryptocurrencies in 2019 until last week has not been seen since the Wall Street debacle of 2008.
Following his resignation as FTX CEO on November 11, sinking specialist John Ray became responsible. It was he who became the head of Enron in 2001, at the height of the storm, and it was he who liquidated what was left of Nortel Networks in 2009.
“Nearly every situation I have been involved in has been characterized by weaknesses in either internal control or compliance,” Mr. Ray wrote in a legal document filed Thursday morning.
Controls that control nothing
Nail? “Never in my career have I seen such a complete failure of corporate control and such a complete lack of reliable financial information as in the case of FTX,” he also wrote.
The fall in SBF begins on Nov. 5, when dedicated site Coindesk reveals serious problems with Alameda Research, a hedge fund linked to FTX.
In fact, the fund speculated on its own account and on the money of clients, which is prohibited in the US and Europe after the 2008 crisis.
On the other hand, players in the cryptocurrency sector, all of whom are in tax havens, can continue to do so as they are protected from any surveillance.
FTX has loaned approximately $10 billion in client funds to Alameda.
After the revelation, things quickly went awry. The value of SBF has dropped from US$16 billion to zero. He stepped down as CEO and protected the company from creditors.
A 30-year-old man is currently the subject of a criminal investigation in the United States. More than 100,000 of her clients will never see their money again.
As for prestigious FTX shareholders like the Ontario Teachers’ Pension Plan ($95 million), Sequoia, Softbank or Samsung, they can say goodbye to their investment.
Some celebrities involved in the scandal
The FTX boss has given shares in the company to many stars in exchange for their advertising services. These celebrities are now being sued in a class action lawsuit filed this week in a Florida court by powerful attorney David Boyce. Here is some of them.
The seven-time Super Bowl champion is an FTX spokesperson and one of 13 people named in the lawsuit. After the fiasco, he deleted numerous tweets promoting FTX.
The Japanese baseball prodigy who plays for the Los Angeles Angels is also an ambassador for FTX. His services were paid for with cryptocurrencies and shares of the company, the network reported to CNN.
The 25-year-old tennis player, winner of four Grand Slam titles, is an ambassador for the FTX brand. “We’ve seen statistics about how few women are in crypto,” she said in March, noting how she hoped to change that. She is named in the lawsuit.
The best shooter in NBA history starred in an FTX ad campaign in which he said, “I’m not an expert and I don’t need it. With FTX, I have everything I need to buy, sell and trade cryptocurrencies securely. Curry is among the named defendants in the class action.
File photo, WENN.com
The famous model, who recently broke up with Tom Brady, partnered with her ex in a TV ad campaign that looked like a pyramid sale during the last Super Bowl. She also participated in an advertising campaign that graced the streets of San Francisco.
FTX in a few days
- 2019 | Creation of FTX, a website for buying, reselling and exchanging cryptocurrencies in the Bahamas.
- JANUARY 2022 | The company is valued at US$32 billion.
- SPRING 2022 | Sam Bankman-Fried, founder and CEO, has a personal net worth of $26.5 billion.
- NOVEMBER 8 | His fortune is estimated at 15.6 billion US dollars.
- NOVEMBER 11 | FTX files for bankruptcy in Delaware court. Sam Bankman-Fried sends a “sincere apology” to his 975,000 Twitter followers.