The indictment Tuesday of Sam Bankman-Fried, the former head of the failed cryptocurrency platform FTX, following his arrest in the Bahamas, marks the arrival of US authorities in this scandal. A turning point for all the actors in this case with multiple twists.
The American judicial machine has been launched with the FTX scandal. On Tuesday, December 13, the United States Securities and Exchange Commission (SEC) charged Sam Bankman-Fried with fraud. The former director of the failed FTX empire was arrested the day before in the Bahamas.
A new chapter opens after weeks of revelations about the background to this high-profile bankruptcy in the world of bitcoins, as the United States Congress began public hearings on Tuesday to learn the details of this financial scandal.
Now that the pressure on the different protagonists of this saga is greater than ever, France 24 reviews the gallery of characters who have made and undone FTX, for a long time a symbol of the success of cryptocurrencies.
Sam Bankman-Fried. He is the former “darling” of the cryptocurrency world and founder of the FTX exchange, which went bankrupt in early November. Nicknamed “SBF”, he was arrested on Monday December 12 in the Bahamas at the request of US authorities.
He is accused of multiple frauds. “We hold that Sam Bankman-Fried built a house of cards based on deception while he told investors that FTX was one of the strongest buildings in the cryptocurrency world,” said Gary Gensler, head of the SEC. FTX has cost investors around the world hundreds of millions of dollars.
As soon as the scandal broke, 30-year-old “SBF” fled to the Bahamas, where FTX was based. He is now in prison awaiting his extradition to the United States, but the process could take time if he chooses to challenge it, the New York Times reported.
Caroline Ellison
Right hand of Sam Bankman-Fried and precocious “genius” of mathematics and finance. In the gallery of FTX scandal characters, Caroline Ellison occupies a special and central place: she was the director of Alameda, the discreet investment company in the shadow of FTX.
It was there that Caroline Ellison made a series of stock bets that even Sam Bankman-Fried considered risky. The problem was that Alameda was using and squandering the funds that the users of the platform entrusted to FTX.
“SBF had long trusted this woman they had met when they were both traders for the Jane Street Company. Legend, supported by a portrait in Forbes magazine, portrays Caroline Ellison as a precocious child with an innate sense of mathematics. It is said that he read the second Harry Potter book at the age of five and gave his father a presentation on the economics of soft toy prices as a birthday present when he was not yet ten.
At eighteen, she graduated at the top of her class in mathematics from Stanford University and embarked on a career in finance, detailing her outlook on life on the now-defunct Worlddoptimization blog, the contents of which have been archived. In it, she describes her slow transformation from “traditional” girl to a more liberated woman and calls most cryptocurrencies scams. No one knows where the 28-year-old is now.
Changpeng Zhao
Sam Bankman’s partner Fried became his enemy. Everything started well between the two cryptocurrency giants. Changpeng Zhao, the head of the Binance exchange, had invested millions of dollars in FTX in 2019 to support the growth of the SBF site.
But nearly three years later, a tweet from this man known as “CZ” caused FTX to collapse. Changpeng Zao announced on November 8 that he was getting rid of all his FTT (FTX cryptocurrency) because he no longer believed in it. The result was immediate: panic among investors who, when trying to recover their money, realized that FTX no longer had the funds…
There are divergent opinions about the reasons for this stab in the back. Changpeng Zao declared himself more than fed up with Sam Bankman-Fried’s efforts to convince the US administration to better regulate the world of cryptocurrencies. The Binance chief has always fought against government interference in the field of bitcoin and other intangible currencies, recalls the South China Morning Post. He also suspected that the CEO of FTX was trying to hurt him with US regulatory authorities to further his own interests.
Others suggest that the Chinese businessman simply wanted to get rid of his main competitor. “His maneuvering of him has allowed him to become the undisputed king of cryptocurrencies,” notes the Washington Post.
However, his throne could be more fragile than you think. Apparently, the US Department of Justice is about to launch a criminal investigation against Binance on suspicions of enabling money laundering, according to the Reuters news agency. CZ’s efforts to prove that his empire was much stronger than Sam Bankman-Fried’s hasn’t convinced everyone either. He commissioned an audit of his accounts that only partially lifted the veil on “the mystery of the group’s finances,” according to the Wall Street Journal.
John J Ray III
The liquidator. “I have never seen such a succession of failures at all levels of an organization”, or: “the managers (of FTX) were woefully inexperienced” and engaged in “totally unacceptable practices”. This vivid portrait of Sam Bankman-Fried’s years at the helm of FTX was painted on Tuesday, December 13 by the group’s current head, John J. Ray III, appointed to liquidate it.
Since he took charge of the FTX file on November 11, this lawyer has not missed an opportunity to shoot at “SBF”. And his words carry weight in the US: The 70-year-old liquidation expert has been a national star since he managed the biggest bankruptcy in US history: Enron’s in 2001.
He was also in charge, among others, of the bankruptcies of the Canadian telecommunications giant Nortel in 2013 and the US oil group OSG (Overseas Shipholding Group) a year earlier. John J. Ray III has lived through many desperate situations… But he considers FTX to be “the worst failure” he has ever faced.
Gary Wang
The co-founder and shadow coder. He’s about as low-key as Sam Bankman-Fried can be exuberant in the media. So much so that the existence of Gary Wang, co-founder of FTX and co-CEO of Alameda, is barely mentioned in articles about the group’s debacle.
Yet the 29-year-old computer scientist – the youngest billionaire on Forbes’ list of the 400 richest Americans – is omnipresent in the FTX adventure. He has followed SBF for many years and shared a dormitory with him at the Massachusetts Institute of Technology (MIT).
Garry Wang, however, struck out on his own for a while, working for Google for a few years as a software developer. But as soon as ‘SBF’ embarked on the FTX adventure in 2019, his IT partner joined him.
He is the one who was in charge of all the computer architecture of the platform and would know all the little secrets of the company. The only problem is that no one knows where it is and it has no digital presence. Will he manage to stay hidden while the pressure on FTX mounts?
*Article adapted from its original in French
