Oct 3, 2023

The FTX empire collapsed last year, creating a ripple effect across the crypto sector. So, how did we get here?

Video transcript

The FTX Empire collapsed last year causing a rippling effect across the crypto community. And now founder Sam Baman Freed begins his trial where he's facing seven charges related to fraud and conspiracy. How did we get here? I'm Jen Senai. Welcome to this special edition of Coindesk Daily on the SPF trial. After leaving Jane street capital in 2017, Sam Bank Fried, then 25 years old co founded Alameda Research, a small quantitative trading firm based in Hong Kong. Two years later in 2019, Bank F freed would go on to found FTX which quickly became the second largest crypto exchange in the world. FTX began to make a name for itself as the then Ceo Sam Baman freed gifted president Joe Biden's campaign $5.2 million. The second largest donation, the presidential campaign received. The exchange continued to appear in headlines with sponsorships like the $135 million deal for naming rights to Miami Heat's Arena and its deal with MLB that saw its logo fixed on umpire uniforms across the league. It didn't stop there though the exchange signed several celebrities as brand ambassadors including Tom Brady Shaquille o'neal and Steph Curry. Larry David even starred in ftxs 2022 Super Bowl commercial. Like I was saying, it's FTX. It's a safe and easy way to get into crypto. Yeah, I don't think so. And I'm never wrong about this stuff. Never. It turns out the need for funds to run Alameda trading business was one of the reasons that Bank Man Fried created FTX in the first place. That's according to the New York Times and as crypto prices began to drop amid a chilly crypto winter trouble in one entity spelled doom for the other. In November 2022 Coindesk published a scoop highlighting potential leverage and solvency concerns. It revealed that Alameda Research held a position of $5 billion worth of ftxs native Token F TT. The report authored by Ian Allison also revealed that Alameda Investment Foundation was in F TT the Token created by FTX days after the story was published. FTXS assets were frozen in the Bahamas Bank. Man. Fried stepped down as CEO and FTX filed for chapter 11 bankruptcy protection under new leadership, wiping out billions in customer assets. On December 12th Bank. Man Fried was arrested by authorities in the Bahamas and would later be extradited to the US just before Christmas of last year. He was released on a $250 million bond, the largest in history in August SPF was ordered to spend the rest of his time awaiting trial in federal jail. The judge overseeing the case saying there was probable cause to believe Bank Fried had tried to quote tamper with witnesses at least twice. Sam Baman Fried's roughly six week trial is now underway. The 31 year old is facing seven related to fraud and conspiracy. If convicted and sentenced to the maximum punishment, he could spend the rest of his life in prison. That's it for this special edition of Coindesk Daily. Get more updates on Coindesk dot com and don't forget to subscribe to the SPF trial newsletter. We'll see you next time.

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