FTX filed for bankruptcy 2 years ago — What’s happening now?

As a seasoned crypto investor who has witnessed the meteoric rise and fall of various exchanges, I can confidently say that the downfall of FTX was a sobering reminder of the wild west nature of this industry. I remember vividly the day Sam Bankman-Fried stepped down, feeling a pang of unease as the exchange spiraled into chaos. The subsequent bankruptcy filing, criminal charges, and prison sentences have left a lasting impact on the crypto world.

On November 11, 2022, Sam Bankman-Fried stepped down as FTX’s CEO, transferring control to John Ray. Within days, Ray initiated Chapter 11 bankruptcy proceedings in the U.S., signaling the start of the decline for an exchange that had previously been a global leader and major player in the cryptocurrency market.

U.S. officials accused Bankman-Fried and four other individuals of committing fraud. As a result, FTX users and debtors found billions of dollars in funds inaccessible, questioning whether the platform would be able to repay them. Ray described the company as a “complete collapse of corporate governance at every level within the organization,” later likening its operations to a blazing fire in a dumpster.

Apart from FTX affecting countless users and staff members, the platform was frequently used as a joke by lawmakers and industry leaders when talking about cryptocurrency. It became one of the most notorious instances of unethical behavior in the crypto world. The company went bankrupt during a downturn in the cryptocurrency market, which turned public sentiment against the industry. As token prices plummeted and several companies filed for Chapter 11, this event further damaged the industry’s reputation.

Two years on from that pivotal day at FTX, I’ve witnessed Bitcoin (BTC) soaring to a never-before-seen peak of over $87,000. Meanwhile, the United States continues to grapple with the aftermath of an election where numerous candidates received backing from crypto political action committees. Their mission was to unseat lawmakers who posed threats to their agendas, and they accomplished this by spending a substantial sum of approximately $134 million.

Prison time and repayments for customers

Additionally, Bankman-Fried and his associates have faced repercussions. The ex-CEO of FTX, Sam Bankman-Fried, was found guilty on seven criminal charges and received a 25-year prison sentence, although his lawyers have lodged an appeal in court.

Among the ex-FTX and Alameda Research executives who admitted guilt for their actions, only Nishad Singh, the engineering director, received a sentence equivalent to time already served due to his involvement in mismanaging client funds. Caroline Ellison, Ryan Salame, and others are anticipated to spend several years in prison. Gary Wang, one of the exchange’s co-founders, will be sentenced on November 20th.

In October, a federal judge in bankruptcy court gave the green light to a plan for FTX’s reorganization. This plan might enable creditors to recover approximately 98% of what they are owed, with users potentially receiving around 119% of their initially stated account value. The strategy is designed to compensate FTX’s customers by returning the worth of their digital assets as they were at the time of bankruptcy, disregarding any subsequent increases in the price of Bitcoin, Ethereum, and other cryptocurrencies.

The FTX estate is pursuing funds that are suspected to have been improperly used by Bankman-Fried and others, which includes political donations, money held in accounts at other cryptocurrency exchanges, and investments made with companies such as SkyBridge Capital. As part of a settlement with creditors, Sam Trabucco, a former co-founder of Alameda, was required to hand over approximately $70 million, properties, and a yacht to the estate.

2024-11-12 00:59

Prison time and repayments for customers

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