On November 11, 2022, the then-CEO of FTX, Sam Bankman-Fried, resigned, handing the company over to John Ray, who immediately filed for Chapter 11 bankruptcy protection in the U.S. That day marked the beginning of the end for one of the most prominent and influential Cryptocurrency exchanges in the world.
U.S. officials have charged Bankman-Fried and four of his associates with fraud. Users and creditors of FTX have seen billions of dollars locked away from them on an exchange they are unsure will be able to repay them. Ray reported that the company represented a "complete failure of corporate controls at every level of the organization," subsequently comparing its operations to a "raging dumpster fire."
In addition to the impact of FTX on millions of users and employees, many lawmakers and business leaders often used this exchange as a highlight when discussing Cryptocurrency, viewing it as one of the most emblematic examples of illegal practices. The company declared bankruptcy amid a downturn in the Cryptocurrency market, leading many public opinions to turn against the industry as Token prices plummeted and many companies filed for Chapter 11 bankruptcy.
Exactly two years after that fateful day at FTX, the price of Bitcoin (BTC) surged to an all-time high, surpassing $87,000. The U.S. is still reeling from the results of the elections, where many candidates were supported by Cryptocurrency political action committees aimed at ousting lawmakers who acted against their interests, spending around $134 million.
Prison time and repayment for customers
There are also consequences for Bankman-Fried and his team. The former CEO of FTX was convicted of seven criminal charges and sentenced to 25 years in prison, although his legal team has filed an appeal.
Among the former executives of FTX and Alameda Research who pleaded guilty to charges, only one—technical director Nishad Singh—has been sentenced to time served for his role in misusing customer funds. Others, including Caroline Ellison and Ryan Salame, are expected to serve many years behind bars. Gary Wang, one of the co-founders of the exchange, is expected to be sentenced on November 20.
In bankruptcy court, a federal judge approved a reorganization plan in October that could allow FTX's creditors to repay about 98% of users with a value of approximately 119% of the amount they claimed in their accounts. This plan will repay the digital asset value of customers at the time of bankruptcy and will not account for the profit of BTC and other Token prices.
FTX's assets are still tracing funds alleged to have been misused by Bankman-Fried and others in the form of political contributions, locked in accounts of other exchanges, and through investment projects with companies like SkyBridge Capital. Former Alameda co-founder Sam Trabucco was forced to return $70 million, real estate, and a yacht to FTX's assets as part of a settlement with creditors.
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