Sam Bankman-Fried, the former CEO of FTX exchange and Alameda Research has been denied bail by a magistrate judge in the Bahamas. Bankman-Fried was arrested following allegations bordering on the mishandling of customers’ funds in the bankrupt FTX exchange and breaking campaign laws.
According to reports from Reuters, the judge mandated that Bankman-Fried be transported to a Bahamas detention facility until February 8 because the Judge deemed his risk of flight to be extremely severe.
The counsel to Bankman-Fried had suggested that the ex-CEO should pay $250,000 in cash and should be allowed to put on an ankle bracelet, but this request was denied by Chief Magistrate Judge, Joyann Ferguson-Pratt.
U.S. prosecutors gave details about the former CEO’s fraud allegation case. According to them, Bankman-Fried concocted a scheme to dupe customers by stealing their deposits and using them to cover costs and bills as well as to invest on behalf of his cryptocurrency hedge fund, Alameda Research LLC.
Bankman-Fried was also charged with making contributions worth millions of dollars to support U.S. politicians during their political campaigns.
The Fall of the FTX Exchange
Sam Bankman-Fried was once a prominent advocate for the use of blockchain technology to improve the transparency and efficiency of financial markets.
Bankman-Fried had told its investors that they should prepare for bankruptcy after failing to get funds to inject into the business earlier in November. Bankman-Fried told investors that FTX needed $4 billion to continue operations, despite the fact that the company has a net loss of more than $6 billion.
A news report from Insidecrypto stated that the fallout of the FTX exchange may be due to the bailout funds the former CEO gave to its subsidiary firm, Alameda Research. The report highlighted that Alameda Research suffered a series of losses in the months of May and June.
It is worth noting that so many investors and stakeholders have lost huge amounts of funds to the bankrupt crypto exchange. In recent times, Kevin O’Leary, a Canadian businessman and ‘Shark Tank’ star shared details on his investment with FTX exchange.
The businessman who was appointed the spokesperson of the crypto exchange before it collapsed said he invested $15 million in the business which was his service fee but lost all his funds.
O’Leary claimed that his investment with FTX was unsuccessful because he had more than $1 million in FTX equity, which is now worthless as a result of the company’s filing for bankruptcy.
