Crypto giant FTX collapses

Anthony Chan '24, Staff Reporter

Cryptocurrency, bitcoin, and online currency: modern terms in today’s society. However, cryptocurrency is now faced with a catastrophic unveiling, after the subsequent arrest of Sam Bankman-Fried on Dec. 12, 2022 while in the Bahamas. 

Sam Bankman-Fried is the owner and CEO of FTX Trading, a company which facilitated crypto transactions and held crypto investor’s currency in a deposit. He is accused of taking funds from the investors in FTX and placing it into a hedge-fund, as an attempt to gain double the revenue invested into the fund. The fund proved unsuccessful.

Brian Davis, math teacher, stated, “The fund lost the money and they could not pay them back,” adding, “FTX’s value dropped by 32 billion to zero and bankruptcy.”

After this huge economic downturn and declaration of bankruptcy of FTX on Nov. 11, Fried attempted to clear his name by hosting several interviews and Q&A sessions across mainstream media.

  Bankman-Fried stated to a New York Times journalist, “Clearly I made a lot of mistakes. There are things I would give anything to be able to do over again. I did not ever try to commit fraud on anyone.” 

He then went to the Bahamas where he was arrested by the Royal Bahamas Police Force to be returned back to the United States, then indicted by the New York federal court on Dec. 9.

Bankman-Fried now faces charges of fraud, conspiracy, money laundering and campaign finance violations and a maximum sentence of 115 years in prison if he is found guilty. 

On Jan. 3, Fried pleaded not guilty to fraud and other charges.

Two other accomplices have also been arrested in co-authoring the alleged scheme, Fried’s girlfriend and owner of the hedge-fund, Caroline Ellison, and co-founder of FTX, Gary Wang. Both suspects pleaded guilty on Dec. 21, 2022 to wire fraud. 

Immediate consequences of the scandal are being felt. As Davis commented, “This caused declines in the Crypto markets as investors lost trust/faith in the market at large.”

  Additionally, long term effects could be devastating for future forms of cryptocurrency, as Gianluca Carboni ’24 stated, “It will negatively affect a lot of the economy in the short term from the loss of wealth, but would benefit the economy in the long term and reduce energy consumption.”

He further observed, “Cryptocurrencies are speculative investments that will never replace modern digit currency because it is speculative.”

While the future is uncertain for young investors and the advancement of technology in online financial markets, Fried’s case is sure to establish a long-lasting resonance in crypto.