The so-called “King of Crypto” Sam Bankman-Fried is about to go on trial for multiple fraud changers. But there’s one British man whom the collapse of Bankman-Fried’s company cost more than anybody else, the BBC reports.
Mr. Bankman-Fried is the founder of the collapsed cryptocurrency exchange FTX, but when his empire was faltering, Sunil Kavuri clung on with the hopes that things could be turned around.
Experience in trading and crypto made Mr. Kavuri hardened to market dramas. Then, just like that, years of savvy, stressful and successful trading went down the drain as £1.7 million was drained out of his account.
FTX: What Happened?
At a time when the crypto market seemed to be hitting a crescendo, FTX was once the world’s second-largest cryptocurrency exchange.
When things started collapsing for FTX, Mr. Bankman-Fried – the self-appointed saviour of crypto – kept telling the world that everything would be fine. A message that was believed by Mr Kavuri.
But then the message popped up on the screen – withdrawals suspended.
So, what exactly happened to FTX?
FTX had been marketed as a safe way for anyone to get involved with crypto. The exchange acted like an unregulated bank allowing people to trade money for crypto coins, such as Bitcoin, and store their funds for safekeeping. It attracted nine million customers in 100 countries.
Alas, mismanagement of funds, lack of liquidity and the large volume of withdrawals meant FTX’s empire was short-lived. Even though Binance announced it would buy FTX to prevent a larger market crash, but quickly bailed out of the deal as more news reports of mishandled customer funds surfaced.
FTX filed for bankruptcy in November last year. When it collapsed, more than a million users were left out of pocket because they were unable to get their money out in time. Court documents show businesses, investors and even charities were among those who lost investments.
FTX Collapse: The Worst Hit Victim
The King of Crypto’s empire was faltering, causing many to panic – but not Mr. Kavuri, who held out hope that Mr. Bankman-Fried would be able to turn things around.
“I was on the computer for basically 24 hours refreshing the page and trying to email the FTX support desk to get my money out. I felt sick. I just thought, ‘Oh my God, that’s it. I’ve lost everything’,” he explained.
Mr. Kavuri – who lives in the East Midlands – was saving the money for a new house and to put his son through university, but now, nearly a year later, all he has is the paper trail of what was once his.
He is thought to be the worst-hit British victim of the FTX collapse.
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The King of Crypto: Fall and Arrest
After a bombshell investigation into FTX by news site Coindesk, it was revealed that Mr. Bankman-Fried had been using FTX funds to buy personal luxury items, finance elaborate advertising campaigns and make political donations.
This caused panicked customers to race to withdraw billions of dollars out of the FTX exchange platform until it went bust and filed for bankruptcy.
Authorities arrested Bankman-Fried on Dec 12, 2022, for multiple fraud charges with FTX. Bankman-Fried was indicted by the U.S. District Court on eight criminal charges, including money laundering, wire fraud, campaign finance violations and securities fraud.
Next week, US prosecutors will begin their high-profile trial accusing Sam Bankman-Fried of these charges.
Mr. Bankman-Fried has, so far, pleaded not guilty, and will travel from prison to a New York courthouse to fight the charges.
Other executives from his companies have already pleaded guilty and are expected to give evidence into how their empire – once worth $40bn – came crashing down.
The central allegation is that Bankman-Fried defrauded customers by using their funds to prop up his own risky investments in his hedge fund. He spent millions on luxury properties and political donations.
Nearly a year on, investors will be watching his court case carefully, while also waiting for news on whether or not they will get any of their money back.
“Sam Bankman-Fried has literally destroyed so many people’s lives,” says Mr. Kavuri.
He has spoken to creditors from all over the world and become a spokesperson for their cause, calling himself “FTX Creditor Champion” on social media. He has also set up Telegram groups, where people share stories about their desperation.
“One person in Turkey was left with only $600 (£490) in their bank account after losing everything and one in Korea was hospitalised with panic attacks,” he says.
And like many FTX investors, Sunil also blames people who helped Bankman-Fried rise to the top. These include influencers and celebrities, including Larry David, Tom Brady and Gisele Bündchen, who promoted the firm – and its CEO – as safe and trustworthy.
On Thursday, Sunil and his wife welcomed their second child, undoubtedly giving him even more drive to recover some of the money he lost.
For now, all he can do is watch, wait and hope until the results of the trial come to pass.