FTX seemed to be a shining example of a cryptocurrency exchange that was doing everything right. Run by Sam Bankman-Fried – a multibillionaire, believed by many to be a once-in-a-generation genius, who rubbed shoulders with congresspeople and called for “thoughtful regulatory leadership” – FTX and its sister companies were bringing crypto to the mainstream. They spent millions on a Super Bowl ad comparing crypto to the invention of the wheel and the lightbulb, urging customers not to “miss out” on “the next big thing” and touting FTX as “a safe and easy way to get into crypto.” During the crypto downturn this past year, Bankman-Fried was compared to JP Morgan for the seemingly endless pile of cash he had to offer floundering crypto firms as he swooped in as a savior. In the span of one week, his empire came crashing down. A leaked balance sheet from Alameda Research, Bankman-Fried’s quantitative trading firm, allegedly showed that a massive portion of Alameda’s assets were denominated in tokens that FTX themselves created. It was already an open secret that FTX and Alameda were tightly intertwined, but there was little hard evidence as to how tightly they were linked, and regulators had not made any substantial moves to investigate the ties.
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