February 3, 2023

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The US is building its case against FTX founder Sam Bankman-Fried

From his mansion in the Bahamas, FTX founder Sam Bankman-Fried has spoken to pretty much anyone who would give him a platform to explain why his crypto empire failed.

US federal prosecutors would also like to know what happened, which is why multiple investigations are now underway against FTX and its founder for allegations of fraud, manipulation and more.

According to Bloomberg, the US Department of Justice is currently investigating millions of dollars allegedly transferred from FTX to the Bahamas, where Bankman-Fried resides. The money appears to have been shifted while FTX froze withdrawals for its own clients.

In addition to this latest investigation, according to the New York Times, US prosecutors are also investigating whether Bankman-Fried (who is also known of SBF) manipulated the market earlier this year and played a role in the collapse of stablecoin Terra and its sister token Luna. The collapse of these two cryptocurrencies sent the entire crypto market into a downward spiral last summer. Terra and Luna founder Do Kwon is currently on the run, hiding from an international arrest warrant issued by South Korean authorities.

These two newly released investigations would come in addition to previously known investigations into whether SBF acted improperly when it turned over FTX client funds to Alameda Research to make risky investments.

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It has now been a month since FTX filed for bankruptcy. What was once one of the largest crypto exchanges in the world collapsed within days after reports that affiliated hedge fund Alameda Research was using FTX client funds for trading and was in fact insolvent.

Billions of customer funds are lost and billions more remain unaccounted for. So people have been asking why Sam Bankman-Fried, the founder – and CEO until the collapse – of FTX is still a free man? What likely complicates the investigation is the way SBF and FTX employees ran the business.

“Never in my career have I seen such a complete failure of corporate controls and a complete lack of trustworthy financial information as here,” said FTX’s new CEO, John Ray III, who was appointed after the bankruptcy. It should be noted that Ray is the same person who was brought in after Enron’s collapse in 2001.

SBF has also been fairly public with its version of what happened, collaborating on Twitter Spaces for numerous interviews with mainstream media and even random crypto advocates. SBF claims he did nothing improper and the collapse of his crypto empire was simply due to poor business decisions by him and his company.

While critics have poked holes in SBF’s claims, it seems we’ll soon officially know more about the alleged criminal activities in which SBF is said to have been involved.