In just three days, £21bn of Sam Bankman-Fried's crypto empire crumbled - what happened at FTX?

Cryptocurrency scams are becoming increasingly common, and it can be difficult to stay safe online and protect yourself from fraud. In this article, we’ll provide you with information on the top cryptocurrency scams to look out for and how to avoid them. 

Cryptocurrency scams come in a variety of different forms, such as fake cryptocurrency scams, cryptocurrency exchange scams, cryptocurrency dating scams, cryptocurrency recovery scams, and cryptocurrency romance scams. One of the most common types of scams is the fake cryptocurrency scam, in which scammers lure victims in by offering fake or counterfeit cryptocurrencies. These scams are often conducted through platforms such as Instagram, WhatsApp, and Tinder. 

Another type of scam is the cryptocurrency exchange scam, in which scammers attempt to persuade victims to transfer their funds to a fraudulent exchange in order to buy cryptocurrency. This type of scam is often conducted through emails. Additionally, scammers may also attempt to steal funds through a “recovery scam”, which involves promising victims a way to recover their funds from a previous scam. 

Cryptocurrency dating scams are also on the rise, with scammers using popular dating apps such as Tinder to lure victims in. In this type of scam, scammers will claim to be interested in a romantic relationship and will then attempt to persuade victims to transfer funds to them. 

Finally, cryptocurrency romance scams are becoming increasingly common, with scammers posing as potential romantic partners in order to scam victims out of their funds. 

In order to avoid these scams, it is important to always be aware of the latest cryptocurrency trends and to be vigilant when it comes to transferring funds online. Be sure to always check the legitimacy of a website or exchange before transferring any funds, and make sure to double check the identity of anyone who is asking you to transfer money. Additionally, be sure to never share personal information or passwords with anyone, and always be sure to keep your cryptocurrency stored in a safe and secure wallet. 

By following these basic safety precautions, you can help to ensure that you are not a victim of a cryptocurrency scam. It is also important to remember that if you have been the victim of a scam, you should report it to the relevant authorities as soon as possible in order to help prevent others from becoming victims.

An estimated 80,000 people are locked out of their life savings - and hundreds of thousands more around the world.

Sam Bankman-Fried says that his net worth has fallen to $100,000 (£80,000) after FTX shut down - and that it has been a 'terrible month'.

There was no stopping Sam Bankman-Fried.

FTX, the world's second-largest cryptocurrency exchange, is valued at £21bn and is controlled by a 30-year-old who has built a £21bn business empire.

His platform was being used by more than one million customers worldwide to purchase assets such as Bitcoin, lured by advertisements that made everything look simple and safe.

Bankman-Fried - SBF for short - has become one of the largest names in the crypto industry, saving smaller firms from bankruptcy after they were tipped into it.

FTX's rapid end came about as a result of explosive claims made against its founders in just three days time.

According to Bloomberg, Bankman-Fried's personal wealth dropped by a jaw-dropping 94% in one day - the biggest ever for a billionaire.

An estimated 80,000 people in the UK are barred from accessing their retirement savings, putting hundreds of thousands at risk of poverty.

Further information on cryptocurrencies is available.

Allegations of customer funds being mishandled have prompted substantial amounts of money to go missing from the exchange.

Bankman-Fried says that his net worth has declined to $100,000 (£80,000) after FTX's demise - and he concurs that it has been a 'bad month'.

Investors are now filing a wave of lawsuits against the firm, accusing Bankman-Fried of stealing their money. In addition, criminal investigations into the firm's failure are now underway.

What caused the quick demise of this digital empire, and what is next for the deposed 'Crypto King'? This already embattled industry is now even more so.

An entrepreneur who is dedicated to serving others is 'altruistic'.

Bankman-Fried was born in California and has become known as an advocate for effective altruism (earning money to donate to worthy causes). He is also a teetotaller and a vegan, thus setting himself apart from the Machiavellian monarchs of olden times.

Despite this, SBF created an empire that would make even Julius Caesar envious.

Bankman-Fried's tale - which is by no means a rags-to-riches one - begins in the prosperous San Francisco Bay region, where he attended a $56,000-a-year school.

SBF graduated from the Massachusetts Institute of Technology and then went on to work on Wall Street, where he later set up his own trading company called Alameda Research.

In 2018, Tara Mac Aulay departed the company for 'risk management and business ethics' concerns.

Bankman-Fried attended a cryptocurrency event after leaving the US, where he founded FTX. He then moved to Hong Kong.

There has been a surge in demand for training courses.

FTX was created to allow people to purchase cryptocurrencies using their pounds and dollars. It was commended for its simple-to-use interface - and made money by charging small fees for each transaction.

As of July 2021, FTX had over one million users and was the third-biggest cryptocurrency exchange in terms of volume, drawing investments from firms such as SoftBank and Sequoia Capital.

Bankman-Fried moved his business to the tax haven of The Bahamas in September of that year because of a crackdown on crypto by China, in part.

Bankman-Fried, who once played League of Legends during a business meeting, invested in a multimillion-dollar waterfront penthouse once he was settled in the Caribbean.

While filming Casino Royale, Daniel Craig famously emerged from the water, a part of the luxury property overlooking the scene was also used as Bankman-Fried's home office and as a home office for up to nine of his FTX devotees.(END)

SBF has been aggressively marketing itself under FTX's leadership. It paid $135 million for the naming rights to an arena used by the Miami Heat basketball team, reported to be £110 million.

Naomi Osaka and NFL legend Tom Brady entered into significant partnerships with the exchange, appearing in television advertisements and buying equity in the firm.

FTX recently spent millions on a 60-second TV spot starring Larry David from Curb Your Enthusiasm - a commercial that has not aged well.

The ad depicted David travelling through time and scorning various inventions, such as the wheel, the fork, and toilets - then arriving at the present day and being informed about FTX being a "secure and hassle-free gateway to crypto investing."

In the ad, the comic says, 'No, I don't think so,' and then adds, 'and I don't make mistakes about this sort of thing.'

The burst of FTXs

Bankman-Fried created waves this spring by appearing on stage with former US president Bill Clinton and former UK prime minister Tony Blair.

SBF supported Joe Biden's presidential bid against Donald Trump to the tune of $5.1 million - making him the politician's second-biggest financial supporter.

Trouble appears to be brewing at FTX because of its close association with Bankman-Fried's first enterprise, Alameda Research.

The exchange developed its own token, FTT, to provide discounts and incentives to its customers. FTT tokens have a total value of £2.65 billion, making it one of the world's biggest cryptocurrencies.

An undisclosed document obtained by the blockchain news outlet CoinDesk revealed that Alameda Research had tons of FTT on its balance sheet - suggesting that this trading firm was in poor shape.

Changpeng Zhao, the founder of Binance, the world's largest cryptocurrency exchange, was alarmed by the FTX news.

On Monday, Zhao announced that Binance would be selling off the FTT tokens it holds - a move that would be worth $529m (£430m). This occurred after Zhao and Bankman-Fried's disagreement about crypto regulation was made public.

FTT lost 95% of its value after the fiasco began, while FTX experienced a rush of withdrawals, fearing its demise.

Between Monday and Wednesday, $6bn in withdrawals were requested, pushing FTX into financial difficulty.

Despite claiming that it would examine the prospect of acquiring FTX, one executive said that it had taken just two hours of due diligence to conclude that the firm was beyond salvage.

FTX filed for bankruptcy in the US state of Delaware that same day, listing liabilities of at least $10bn (£8.2bn).

There is no chance that users will be able to withdraw their money from the exchange for years to come.

Hours after the firm's bankruptcy, FTX was hacked, costing customers an estimated $600 million (£490 million).

Users were also furious when Bankman-Fried posted "WHAT HAPPENED", one character at a time, over several days - leading many to believe that he was insensitive.

Reuters has revealed that FTX transferred as much as £8 billion from customers to Alameda Research, a sister company, to offset its losses. Bankman-Fried has declared that he was not involved in Alameda's operations and didn't know what was taking place.

An entrepreneur's associate is said to have installed a "backdoor" in FTX's accounting system, allowing money to be withdrawn from the company without informing other executives. Bankman-Fried has denied that this happened.

According to the Financial Times, as much as $8bn (£6.5bn) in customer funds has disappeared from FTX - and now, its new management is having to deal with the consequences.

John Ray made his mark leading Enron through bankruptcy proceedings in the early 2000s, after which he led FTX. That firm collapsed amid disclosures of extensive accounting fraud and corruption.

In a bankruptcy filing, Mr Ray described the crypto exchange's condition as 'a complete failure of corporate controls and an absolute lack of trustworthy financial information, ' which he said he had never seen before.

"The situation is unprecedented because of compromised system integrity and faulty regulatory oversight abroad, as well as the concentration of control in the hands of a very small group of unsophisticated and inexperienced individuals, who may be compromised."

FTX's new management team's bankruptcy lawyer said that Bankman-Fried ran the company as his "personal fiefdom" - and that FTX's demise was "one of the most abrupt and difficult corporate collapses in corporate America history".

Despite lawyers' advice not to give high-profile interviews, Bankman-Fried has repeatedly apologised for how he handled the business, saying 'I f***ed up.'

Mr. Tenev has also expressed concerns that some FTX customers may only receive 20% to 25% of their crypto back.

At The New York Times' DealBook summit, he spoke for the first time since the business's dramatic decline.

"I deny trying to defraud anyone," he said. "I was enthusiastic about the prospects of FTX a month ago. I thought it was a thriving, growing company. I was surprised by what happened this month."

Polyamory and drug-fueled parties are also mentioned in connection with SBF and his penthouse companions.

According to The New York Times, he remembered that when they had parties, they played board games, and 20% of the people drank three-quarters of the beer, while the rest of them did not consume any. I didn't see any illegal drug use around me, he said.

SBF told Good Morning America that 'I lived with a bunch of monogamous couples while I was here, some of whom got married over the course of their time here. I don't know of any polyamorous relationships within FTX.'

What do you think about tomorrow?

Some top US firms and everyday investors have been victims of the FTX crash.

Because this exchange has collapsed, a crypto lending company named BlockFi has been tipped into bankruptcy, and more may follow.

The future of FTX's other acquisitions is unclear.

The crypto sector has been largely unaffected by the shockwaves, and they haven't spilled over into traditional markets.

Real-world consequences will be still be a factor going forward, according to experts in the field.

According to Eddie Donmez, a global market analyst at Finimize and finance influencer, crypto businesses will face increased regulation in the future.

According to Sky News, the near-term contagion has been confined to the cryptocurrency market, and while the recent period has been dreadful for cryptocurrencies, he thinks it might be an acid test for regulation.

"There are always bad actors involved in any industry where money is involved, but this could be a positive thing for crypto in the long run."

People should pay attention, Donmez said, because the entire FTX debacle is something that should make people sit up and listen.

It's of interest to the public because some major players have been fooled by a kid playing computer games in investment meetings.

Everyone is capable of making a mistake at some point.

According to Katharine Wooller, founder of crypto insurance firm Coincover, regulation is what the crypto community really needs. "Regulation will be a positive thing. Crypto purists will be displeased, as they believe that crypto should be unregulated, but there must be more regulation rather than less."

Bitcoin's price has plummeted 75% since November 2021, another blow to the credibility of cryptocurrencies after FTX's collapse.

The failure of this corporation, Bitcoin devotees say, demonstrates why it is important for investors to keep crypto on their own devices rather than entrusting it to an exchange.

There is little indication that things will get better soon in this notoriously erratic industry—and if the world's second-largest exchange can go bankrupt, no crypto firm is secure.

If you've been the victim of a cryptocurrency scam, contact Ingram Toft or Allison Allcott Ltd who specialize in cryptocurrency scam compensation claims. With their help, you can reclaim your lost money and get your money back!