![[Img #74664]](https://thelatestnews.world/wp-content/uploads/2024/12/James-Watson-The-controversial-genius-behind-the-double-helix-150x150.jpg)
First modification:
He walked out the courthouse hand in hand with his parents after signing a $250 million bond that allows him to be at home in California while a trial unfolds on charges of fraud and embezzlement of users’ money from his cryptocurrency exchange company, FTX.
Sam Bankman-Fried will now go under house arrest at his parents’ home in Palo Alto, California, while he receives the court’s verdict, an agreement he reached after signing his federal pre-trial bond.
The assistant federal prosecutor, Nicolás Roos, accuses him of having perpetrated a “fraud of epic proportions” and among the conditions of the bail he asked that Bankman-Fried be released with the use of an electronic bracelet and house arrest.
“Do you understand that if you try to flee you are facing arrest and a debt of $250 million,” Judge Gabriel W. Gorenstein asked him. “Yes, I understand,” Bankman-Fried replied.
The strict conditions of the bond also prevent the young entrepreneur from opening new lines of credit, starting a business or carrying out financial transactions of more than $1,000 without the prior approval of the Government or the court of his case.
The defendant was not asked to define whether or not to plead guilty and his lawyer, Mark Cohen, rejected any comments from the hearing regarding the result of the Manhattan court on Thursday, December 22. On January 3, 2023, the court awaits him again.
From billionaire to bankruptcy in three days
Without having reached the age of 30, Sam Bankman-Fried appeared on the world map of large investments when in 2019 he founded his company FTX.
Two years later, the young promise from Silicon Valley officially became a billionaire and in 2022 his company rose to the position of the second largest digital currency exchange platform in the world, after China’s Binance.
In that time, the cryptocurrency buying and selling platform grew to become a titan of the industry, trading between $10 billion and $15 billion every day.
But the big problems for him and his company came on November 2 following a report from the specialized portal Coindesk.com, which revealed that most of Alameda Research’s assets were FTT, an exchange currency issued by it. FTX.
In the text it was evidenced that, if the values of the FTT fell, Alameda Research (the speculative investment fund created by Bankman-Fried himself) could face enormous difficulties.
A few days later, big Chinese competitor and Binance leader Changpeng Zhao announced his intention to dump $500 million in FTT, news that rocked digital markets, spooked investors and sparked immediate panic.
As a consequence, FTX coins lost 80% of their value and fear spread among clients who tried to retain more than USD 6 billion in assets.
At that point, a bank run occurred, a situation that occurs when users withdraw their deposits en masse, from a company that begins to have liquidity problems. With hundreds or thousands leaving the company, over time, they drive it out of business.
FTX tried to turn to Binance to save itself from bankruptcy, but the Chinese company withdrew from the agreement after discovering a deficit of USD 8,000 million in the accounts of the American company.
Presumed responsible for one of the biggest digital crimes in history
In addition to the liquidity problems that FTX suffered, its owner was added an investigation into how he used clients’ money.
Bankman-Fried was accused of using the money of its users to allow operations in its other project, Alameda Research, to spend extensively on luxurious properties and to make million-dollar campaign contributions to US politicians.
In parallel, the US Securities and Exchange Commission filed another indictment against the 30-year-old former billionaire for defrauding the company’s investors.
The ‘crypto winter’ and the contagion effect
What happened with FTX only worsens the outlook for the world of cryptocurrencies, since it drives away skeptics much more and generates a scenario of widespread mistrust of what could happen with the foreign exchange market for digital currencies.
With the FTX scandal and widespread panic, the value of major cryptocurrencies has fallen with a contagion effect, from the largest, Bitcoin, to smaller companies wanting to break through in the loosely regulated world of virtual currencies.
On the other hand, the ‘crypto winter’, which has been talked about since 2021 in different seasons, represents a sustained drop in the price of cryptocurrencies, a price that is determined by the basic economic rule of supply and demand (when many want to buy, the price goes up and when few are interested, its price goes down). Which means that currently, the cryptocurrency industry suffers the consequences of winter.
But for other analysts, the negative panorama only translates into a bearish period that only evokes the “common” market cycles in which dozens of bad news leak out that make investors reel, but that this is not about the final thrust for the crypto world.
With AP and Reuters.
