On Thursday 28th March, Sam Banmkman-Fried formed CEO of FTX was sentenced to 25 years in prison after being charged with fraud over his conduct while CEO.
The collapse of FTX is fascinating, in that from the outside it looked invincible. Millions of people had their funds in it and Sam Bankman-Fried was a hard person to criticise. When it did sink, like the titanic, I wanted to know more about how it actually happened and also why. This is why the subsequent documentary ‘When Money Breaks: FTX’ was more about the finances and less about the attention grabbing headlines.
Martin Lewis believes that consumer journalism is very important in media and I viewed the documentary as a means to an end in this regard. FTX was after all aimed towards retail investors and the amount of people who invested in it made me aware that they may not know how or why it happened. While traditional investing has changed with the rise of crypto currency, the process of making good decisions has stayed the same. I hope if you’ve already watched the doc it has helped you question or given you more tools in order to question and make you think. If you haven’t yet watched the doc, I hope you will and if you do that you enjoy it.
Sam Bankman-Fried was convicted of 7 counts of fraud in November 2023, his conviction of 25 years was unsurprisingly annoying to him as he wanted it to be 5 times shorter. Alas the original sentence could have been as high as 150 years so in many ways he should consider it to be a small victory as very rarely do people actually sit their entire sentence. He has decided to appeal the conviction and I am sure there will be more court cases coming up soon. At the very least there is some sense of closure for the people who suffered at the bankruptcy. This is after all what really matters in this story, not some billionaire who lost paperwork and needed a comeback instead it was the millions of people who lost a lot more.
Will this lead to a change in how white collar crime is seen as? Usually there are more fines for poor economic behaviour over actual jail sentences making FTX rare. Personally I have my doubts however to be proven wrong would be a wonderful surprise especially with how much it affects the ability of the average person to trust their investments.
To this Sam Bankman-Fried has promised that all of the investors will get all of their money back, whether this will end up being true however will have to be seen.
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