The end of the year in crypto news is now almost entirely centering on FTX. Sam Bankman-Fried’s fall from grace has been jaw-dropping in many ways. And, it is getting everybody — investors, regulators, crypto critics — talking about what happened and where to go from here. These questions are sure to follow the industry well into 2023 as lawmakers create crypto infrastructure. In the meantime, we continue to see updates on Bankman-Fried’s arrest and another court’s handling of the biggest crypto bankruptcy the world has ever seen.
Indeed, it’s been well over a month and a half since FTX’s downward spiral catalyzed. Since learning of FTX’s hidden balance sheet woes, investors have had lots of questions. After all, if the world’s second-biggest exchange is more unsafe than they let on, are other exchanges any different? Of course, this worry has been compounded by other stories circulating the crypto space, like Binance’s (BNB-USD) failed attempt at providing transparency through proof of reserves audits. In effect, FTX’s demise has sown more distrust between investors and crypto projects than ever before.
Ever since, the crypto world has had its eyes on Sam Bankman-Fried, the founder and CEO of FTX from its inception until mid-November. After stepping down from his role, the company descended into bankruptcy, helped by Enron liquidator John Ray III.
Ray and Bankman-Fried have since been developing two very interesting storylines. One has been helming a sinking ship without a manual from the builders explaining how anything works. The other has been working his way through the Bahamian court system. He now faces extradition to the U.S. courts.
FTX Bankruptcy Proceedings Push on as Sam Bankman-Fried Comes to the U.S.
This week is another busy one for FTX news. Both the company’s bankruptcy proceedings and Sam Bankman-Fried’s criminal tries have picked up steam. As creditors unveil the full scope of the company’s holdings, Bankman-Fried faces extradition to the U.S. and a potential 115-year prison sentence.
John Ray III is uncovering the inner turmoil plaguing FTX in the lead-up to its bankruptcy. The new CEO was quick to slam the executive board at FTX upon his hiring, saying he had never before seen “such an utter failure of corporate controls.” Among his many complaints are comments about a complete lack of internal communications and the fact that the multi-billion dollar company was using QuickBooks for its bookkeeping.
This week, Ray is bringing forth new details on the beleaguered company’s financial situation. Ray’s team is reporting in Tuesday’s procedural bankruptcy hearing that they had scraped together just over $1.2 billion in cash. Of this sum, $720 million exists in cash assets it has not yet consolidated. The other $500 million exists under institutional custody. Meanwhile, FTX has sent out emails to recipients of political donations from the company asking that these funds are returned.
While Ray continues to scrape around for more money, Sam Bankman-Fried is preparing for a heated incoming courtroom battle. Bankman-Fried was arrested last Monday in the Bahamas, where he was quickly dragged to the courtroom to answer on fraud charges made by the U.S. government.
The FTX founder stunned his own legal counsel once again on Monday in the Bahamian court. This time, Bankman-Fried agreed to be extradited to the U.S. The news comes only days after it appeared he would be fighting the possibility of extradition. Bankman-Fried’s change of heart is especially stunning considering the reality he is up against; if convicted on all of the U.S.’ charges, he could face up to 115 years of prison time.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.