scorecardThe ultimate insider's guide to the dramatic downfall of Sam Bankman-Fried, Caroline Ellison, and FTX
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The ultimate insider's guide to the dramatic downfall of Sam Bankman-Fried, Caroline Ellison, and FTX

Sindhu Sundar   

The ultimate insider's guide to the dramatic downfall of Sam Bankman-Fried, Caroline Ellison, and FTX
CryptocurrencyCryptocurrency7 min read
Sam Bankman-Fried is expected to enter a plea on Tuesday.    David Dee Delgado/Getty Images
  • Sam Bankman-Fried is facing criminal charges and is expected to enter a plea on Jan. 3.
  • The FTX founder's dramatic arrest in the Bahamas followed an odd media tour and damning court filings.

In just a few years since founding the crypto exchange FTX in 2019, Sam Bankman-Fried built a reverent audience among the US political and financial establishment.

Then it all came crashing down.

Often dressed like he'd just come from a pick-up squash game, the 30-year-old onetime crypto billionaire had appeared with the likes of Bill Clinton and the Davos elite, evangelizing about the future of crypto.

FTX represented a new kind of exchange that promised a safe and efficient way for traders to make transactions around various cryptocurrencies. That vision and its customer growth drew investments from top VCs like Sequoia Capital, Tiger Global, and SoftBank, helping the company quickly reach a stunning $32 billion valuation. Bankman-Fried's own worth was once pegged at around $20 billion, according to Bloomberg.

With some $8 billion in customer funds seemingly gone, financial regulators alleged that what happened at FTX wasn't some novel and complex financial engineering, but a simple and daring fraud scheme along with straightforward mismanagement.

Bankman-Fried, with the obliging support of his lieutenants, sent FTX customer funds to his other company Alameda Research, which allegedly squandered that bounty on risky investments and also served as his "personal piggy bank," according to the US Securities and Exchange Commission.

Federal prosecutors in Manhattan also ensnared Bankman-Fried, with what turned out to be the cooperation of his ex-girlfriend and former Alameda CEO Caroline Ellison and former FTX co-founder Gary Wang. All three have been hit with serious criminal charges for fraud and conspiracy.

Bankman-Fried's project was also about cultivating a sense of legitimacy and ethics around the theoretically lucrative and practically unsupervised scheme that is crypto. He was the rare CEO in the industry who actively courted regulation amid the mainstreaming of a shadowy economy where lack of oversight had been central to its appeal.

He cemented himself as a generous donor to mostly Democratic candidates. Celebrities like Larry David and Gisele Bündchen flocked to his cause, fueling the hype in ads including a now-mortifying Superbowl commercial that's become a subject of an ongoing lawsuit by investors.

Bankman-Fried's downfall and the implosion of FTX happened so fast that you might have missed some of the saga's most eyebrow-raising details. We've woven them all together so you can catch up on some of the key figures in the story of FTX's downfall, the head-spinning investigations, and the litany of charges so far:

Sam Bankman-Fried

An MIT physics graduate who napped on beanbag chairs in the FTX office, played video games at pitch meetings, and whose work uniform consisted of sneakers paired with calf-high white socks and seemingly straight-from-the-dryer T-shirts, Bankman-Fried projected a dowdy aesthetic that seemed to define a new kind of tech billionaire.

He also promoted the image of a demanding and all-consuming work environment at his companies, claiming even toward the end that his problem may have been working just 13 hours a day, down from a normal 18 hours.

His venture in the Bahamas later drew attention for the people running it and their relationships with one another, with Coindesk reporting that a "gang of kids" were behind the enterprise.

In the weeks before his arrest, he'd made multiple media rounds — bewildering observers and perhaps his own lawyers at the time — to explain his version of events, which boiled down to acknowledging that his companies didn't have the internal oversight investors believed it did.

He'd even planned to testify before a House panel, but was arrested in the Bahamas the night before the hearing.

Read Insider's coverage of Bankman-Fried:

FTX founder Sam Bankman-Fried gets by on 4 hours' sleep and multitasks on 6 screens. Insiders break down what the 29-year-old crypto billionaire is really like — and the tough questions facing his company.

Mr. Crypto goes to Washington

The rise and fall of FTX's Sam Bankman-Fried, who went from being a crypto billionaire to being arrested and charged with fraud

Sam Bankman-Fried's FTX saga keeps getting weirder as new details shed further light on how much his companies' finances overlapped

Joseph Bankman and Barbara Fried

Barbara Fried and Joseph Bankman are both Stanford Law Professors whose house in Palo Alto is both a refuge for their son who is currently out on a $250 million bail, and a security for that amount, which they didn't have to actually pay. It means that if he flees, they could lose the house and potentially be on the hook for a portion of that multi-million dollar sum.

Regulators have also alleged that his parents may have benefited from the scheme, though they aren't named as defendants. "Bankman-Fried also used commingled funds from Alameda to make large political donations and to purchase tens of millions of dollars in Bahamian real estate for himself, his parents, and other FTX executives," the SEC said in its complaint.

Read Insider's coverage of Bankman-Fried's parents:

Sam Bankman-Fried's law professor parents have stuck close by their son through the fallout from FTX's collapse. Here's what we know about them.

Sam Bankman-Fried's parents are reportedly in the Bahamas with him, and his father pushed a Stanford law class he was set to teach to the next quarter

Sam Bankman-Fried's parents were at his hearing in the Bahamas, and his mother laughed during the proceedings, report says

Sam Bankman-Fried's mother is pictured arriving at his bail hearing in New York

Caroline Ellison

The daughter of MIT professors, Ellison was known from a young age as a math genius, and met Bankman-Fried at the trading company Jane Street. Bankman-Fried has said they once dated.

Now hit with 7 criminal charges, Ellison has pleaded guilty and expressed contrition before the New York federal court presiding over the criminal cases involving Bankman-Fried. As Alameda's head, Ellison allegedly helped the company borrow "billions of dollars," using FTX's illusory FTT token as leverage, the SEC has alleged.

Read Insider's coverage of Caroline Ellison:

Caroline Ellison is a math whiz, trader, and the shadow figure behind FTX's collapse — here's how a devout Harry Potter fan came to take part in crypto's biggest implosion

Caroline Ellison said she grew up 'exposed to a lot of economics.' Here's everything we know about her MIT economist parents.

Sam Bankman-Fried is in jail, but legal watchers are wondering: Where's ex-girlfriend Caroline Ellison?

Caroline Ellison reportedly told court 'I knew it was wrong.' Here's what could be next for the onetime crypto exec and SBF's ex-girlfriend.

Gary Wang

Regulators have similarly accused Wang, who has also separately pleaded guilty to his own criminal charges, of facilitating the scheme that sent FTX funds to Alameda. They claimed he helped make the code that created that channel to drain FTX funds, and that he took $200,000 of company money "for his own purposes."

Read Insider's coverage of Gary Wang:

Gary Wang, the mysterious FTX cofounder, has pleaded guilty to fraud charges. Here's what we know about the key player in the failed crypto empire.

John J. Ray III

John J. Ray III had choice words about FTX when he took over as CEO in order to steer its surprise bankruptcy filing in November. The restructuring expert, known for helping maximize recoveries for creditors of collapsed firms like Enron, told a Delaware bankruptcy court that there was a virtually unprecedented "complete failure of corporate controls" at FTX.

Read Insider's coverage of John Ray:

The future of FTX and Sam Bankman-Fried is now in the hands of these 2 lawyers who have worked for Enron and Michael Milken

New FTX CEO John Ray is making $1,300 an hour to clean up Sam Bankman-Fried's collapsed crypto empire

Read the explosive bankruptcy filing where FTX's new CEO called out Sam Bankman-Fried

FTX's new CEO accused the collapsed crypto exchange of 'old school' embezzlement that was 'not sophisticated at all'

What happened

FTX filed for Chapter 11 restructuring in Delaware in November, after fellow cryptocurrency exchange Binance dropped out of a plan to potentially take it over. The filing set a series of events in motion for Bankman-Fried's dramatic capture in the Bahamas.

As US investigators closed in, FTX's current CEO Ray described a company with few if any internal protocols around basic accounting and management. He said, for instance, that employee expenses would sometimes be approved with emojis, and that the company used the accounting tool Quickbooks, an odd choice for a large company.

But Bankman-Fried continued to keep a public profile, pitching himself as an open book willing to discuss FTX's collapse and the blunders that led to it.

In a whirlwind week in December, Bankman-Fried was arrested in the Bahamas, held in custody in Fox Hill prison there, and extradited to New York.

Read Insider's coverage of the FTX saga so far:

FTX files for bankruptcy and Sam Bankman-Fried steps down as CEO after crypto exchange fails to secure bailout

The collapse of crypto firm FTX and its superstar founder explained for those who know nothing about crypto

Liberal PACs and charities that got $260 million from FTX and its executives could be forced to give it all back

Lawyers walked us through the FTX bankruptcy filing. It's really, really bad.

Sam Bankman-Fried hit with 8 criminal charges, including fraud and conspiracy for allegedly 'misappropriating' FTX customer funds

The SEC has charged Sam Bankman-Fried and accused him of 'orchestrating a massive, years-long fraud'

The criminal charges against Sam Bankman-Fried carry big penalties and jail time if proven, legal experts say

Read the CFTC complaint against FTX's Sam Bankman-Fried and his associates Caroline Ellison and Gary Wang

The charges against Caroline Ellison, SBF, and FTX cofounder Gary Wang — in 60 seconds