Inside the downfall of cryptocurrency titan Sam Bankman-Fried l Nightline

I think it's fair to say that by any anyone's life this is one of the biggest Financial frauds in American history attorneys from the southern district of New York today announcing charges against Sam bakeman freed founder of cryptocurrency exchange FTX he used that money for his personal benefit including to make personal Investments and to cover expenses and debts of his hedge fund Alameda research bankman freed the crypto Boy Wonder was arrested last night in the Bahamas just hours after saying this in an interview with crypto podcast unusual whales are you worried you might be detained if you stepped foot into the U.S I don't believe I would be but I haven't done a like deep dive into that at some point or it's something I have to think harder about bankman freed was set to answer questions before Congress earlier today via Zoom instead tonight scene leaving his extradition Hearing in Nassau lawyer telling ABC News Mr bankman freed is reviewing the charges with his legal team and considering all of his legal options you're talking about wire fraud conspiracy to commit wire fraud conspiracy to commit money laundering campaign Finance violations they're really saying that all of the money that he was able to get for this business was used in different ways for different kinds of fraud while the new FTX CEO John Ray brought into oversee bankruptcy proceedings told Congress there were a number of red flags we had one person really controlling this no independent board that's highly unusual what a size company this is the southern district in Congress aren't the only ones coming after FTX and bankman freed the Securities and Exchange Commission also charged him with defrauding investors the chairman writing in a statement that Bateman read built a house of cards on a foundation of deception he's facing the possibility of over a hundred years behind bars so this is really serious stuff the more money you're accused of fraudulently obtaining taking the higher the potential sentence it's the latest low point in FTX embankment Freed's catastrophic fall from both Acclaim and billionaire status like I was saying it's FTX it's a safe and easy way to get into crypto yeah I don't think so and I'm never wrong about this stuff never earlier this year FTX was running star-studded commercials during the Super Bowl with FTX I have everything I need to buy sell and trade crypto safely not bad this is big snagging the biggest celebrity endorsements it's the best way to get in the game buying naming rights to the Miami Heat's 20 000 seat Arena and reaching a valuation of 32 billion dollars by making investing in cryptocurrencies seem as approachable as buying a cup of coffee at the top 30-year-old Sam bankman freed fronting magazine covers headlining conferences even testifying before the U.S Congress in the name of crypto transparency one of the really Innovative properties of cryptocurrency markets are 24 7 risk monitoring and engines Sam Pigman freed was a kind of new breed of crypto entrepreneur he drove a Toyota Corolla and he slept on a beanbag in the office and he kind of had his wild and crazy hair I think all those things together just made him a type of character that appealed to kind of a certain demographic in 2017 bakeman freed created Alameda research a crypto trading firm reportedly using one million dollars in Savings and Loans from friends and family two years later he created crypto exchange FTX but in early November it all came crashing down Financial site coindesk published a report saying a huge amount of alameda's balance sheet was made up of billions of dollars worth of cryptocurrency created by FTX making both companies incredibly unstable FTX customers raced to withdraw billions of dollars from the platform billions that it turned out FTX didn't have forcing the platform to temporarily halt withdrawals it just didn't dawn on me that it was possible how did it happen so quickly Portland native Jake Thacker was shocked when he suddenly couldn't access his funds on the FTX site but I was in panic mode um I didn't know who to talk to you about either because no one really understood so I was I was stuck with my own thoughts and people that I didn't know online and their comments uh so it was kind of a spiral for about 48 hours that are just pure panic the SEC alleges that in the end about eight billion dollars worth of money was sent from uh FTX customer accounts to this account controlled by Alameda on November 11th FTX filed for bankruptcy and bankman freed stepped down as CEO tweeting in part I'm really sorry that things ended up as they did and as I said I'm going to do everything I can to make it more right our George Stephanopoulos sat down with bankman freed in the Bahamas for his first Network interview shortly after he resigned as CEO so you do know and you did know that FDX deposits were being funneled to Alameda so I was vaguely aware that that was how some virus were being sent in the first place um didn't that set off alarm bells in your head so there are a lot of people who are involved in that process and look I really deeply wish that I had taken like a lot more responsibility for understanding what the details were of what was going on there I knew that legal was involved I knew that other groups at the company were involved that you know there were agreements drafted up but you're ultimately responsible and ultimately absolutely like I look I should have been on top of this and I feel really really bad and rightful that I wasn't and a lot of people got hurt and that that's on me like Jake who stands to lose over 120 000 worth of crypto that he has wrapped up in FTX I was planning to do things for the holidays with my family I had planned to maybe take some vacation next year um I had to rethink all of my budgets around food and transportation and all that stuff I'm lucky in that sense because I do have a good job and other people were not in such a great spot and I invested like life savings um and they will they may never see that back now he hopes the punishment fits the alleged crime I hope that Justice is Sir do I necessarily think that by throwing the book at this one individual it's going to fix all of the problems that may you know perceive this or exist currently no I don't know if that's the the right answer either to anyone who was watching this or hears about this prosecution if you believe that you have been a victim of these schemes please let us know and to anyone who participated in wrongdoing I would strongly encourage you to come see us before we come see you as for bankman freed his future is uncertain today his application for bail was denied he's currently being held in the Bahamas fighting extradition back to the United States are you worried about going to jail there are a lot of things that are worrying me right now um and you know as best as possible I'm trying to focus on what I can do going forward to be helpful and you know let whatever you know Regulatory and legal processes are happening play out as they will hi everyone George stephanopolis here thanks for checking out the ABC News YouTube channel if you'd like to get more videos show highlights and watch live event coverage click on the right over here to subscribe to our Channel and don't forget to download the ABC News app for breaking news alerts thanks for watching

Channel: ABC News

Views: 488,089

Keywords: Bankman-fried, Sam, abc, crypto, cryptocurrency, downfall, ftx, news, p_cmsid=2494279, p_vid=news-95208367

Id: NWkIeOsOyvo

Length: 8min 28sec (508 seconds)

Published: Tue Dec 13 2022