FTX CEO Sam Bankman-Fried could face legal problems, not too dissimilar to those of Do Kwon. Binance will acquire FTX due to a liquidity crisis.
Sam Bankman-Fried is quickly becoming a pariah in the crypto community. After a liquidity crisis, SBF’s crypto exchange giant FTX will be acquired by Binance, CEO Changpeng Zhou revealed. Binance is the largest crypto exchange and the acquisition of its biggest competitor makes Changpeng Zhou the most powerful man in crypto.
Meanwhile, SBF’s fortunes take a turn for the worse. In a matter of days, Sam Bankman-Fried, the second richest man in crypto, has lost almost all of his wealth. According to the Bloomberg Billionaires Index, SBF was worth $16 billion before the liquidity crisis. However, he is now worth only $991 million.
SBF’s troubles appear to be just beginning. Experts believe that FTX and its founder may see a large number of lawsuits headed their way.
Why might SBF and FTX be in legal trouble?
The crypto community is in an uproar over the FTX crisis. Until now, most of the crypto bear market has been the result of macroeconomic conditions. Coinbase’s research pointed out that two-thirds of the market’s decline is a direct result of the challenging macroeconomic outlook. As the general market would swing from inflation and recession news, so would the crypto market.
1/ I found evidence that FTX might have provided a massive bailout for Alameda in Q2 which now came back to haunt them.
40 days ago, 173 million FTT tokens worth over 4B USD became active on-chain.
A rabbit hole appeared 🧵👇 pic.twitter.com/DtCyPspME0
– Lucas Nuzzi (@LucasNuzzi) November 8, 2022
However, the current pullback is a direct result of FTX and Sam Bankman-Fried’s actions. Lucas Nuzzi, the head of R&D at Coin Metrics, believes FTX provided a massive bailout to Alameda Research. SBF also owns this trading company. He also claims that this bailout probably hit FTX’s balance sheet so hard that it is no longer solvent.
Algorod, one of the biggest crypto-currency influencers, thinks SBF could land in jail. David Bailey, the CEO of Bitcoin Magazine, also claims that FTX is 3AC 2.0. He claims that SBF was running a Ponzi scheme.
Will Binance close the FTX deal?
Experts are concerned that Binance will not enter into the FTX agreement. The agreement is not yet legally binding because Binance has only submitted a letter of intent. If Binance withdraws, it will likely be the end of FTX.