The founder of FTX was arrested! After more than 30 days of fun in the Bahamas, I finally caught someone!

Sam Bankman-Fried (SBF), the founder and former CEO of cryptocurrency exchange FTX, was detained on December 12 in the Bahamas and is most likely to be extradited to the United States to face numerous charges. This arrest came more than a month after FTX declared bankruptcy. The arrest follows FTX’s enormous declaration of insolvency and bankruptcy, which rocked the world of currencies.

According to several analysts, the global crypto asset market has to be mainstreamed, regulated, and standardized because the cryptocurrency business will face increasing compliance issues in the future.

SBF may be extradited to US

The arrest follows the U.S. filing criminal charges against SBF and requesting that the Bahamas extradite SBF as soon as feasible, according to a statement issued by the Bahamas Attorney General’s Office and the Ministry of Legal Affairs. The Bahamas and the United States have a shared interest in holding accountable any FTX associates who may have compromised the public trust or broken the law, according to the statement from Bahamian Prime Minister Philip Davis.

Philip Davis added that, despite the distinct criminal accusations brought against him in the United States, Bahamas will continue its regulatory and criminal investigation into the failure of FTX and will cooperate with law enforcement and regulatory partners there and abroad.

The arrest of SBF marks the debut of a specific action by a U.S. regulator to hold a business accountable for FTX’s bankruptcy. The Southern District of New York U.S. Attorney’s Office tweeted that SBF has been charged by the U.S. Attorney, though the indictment is still secret.

SBF was due to speak about the collapse of the exchange before the U.S. House Financial Services Committee on Tuesday, but only one day before that hearing before Congress, SBF was legally detained.

What kind of marijuana-related problems await SBF? The founder of FTX, SBF, has reportedly been charged with money laundering, securities fraud, wire fraud, and conspiracy to commit wire fraud, per the New York Times’ sources.

If the U.S. federal government prosecutes SBF for wire transfer or bank fraud, according to some legal experts, he may spend the rest of his life behind bars. The Ponzi scheme’s creator, Bernie Madoff, was previously given a 150-year prison term, which is the equivalent of a life sentence.

Yu Jianing, honorary chairman of the Hong Kong Blockchain Association and co-chairman of the China Communications Industry Association’s blockchain committee, told Xinjing News that while SBF may face charges in the U.S. for telecom fraud and other offenses, the impact of SBF’s arrest will be much smaller than the effect of FTX’s bankruptcy. Later on, the incident would cause more domino effects.

FTX Events Lazy Bag

One of the biggest trading platforms for cryptocurrencies, FTX Exchange, was formerly based in Hong Kong but has recently relocated to the Bahamas. SBF, the creator, was a trader for a Wall Street quant fund. After leaving Wall Street, he entered the cryptocurrency market and established FTX, one of the top three trading platforms, and Alameda, the largest market maker in the sector.

More than 130 FTX Group firms, including the cryptocurrency exchange FTX, its U.S. subsidiary FTX.us, and its associated “sister” trading organization Alameda Research, filed for bankruptcy at the beginning of November, according to a social media post by SBF. Additionally, he made his resignation as CEO of FTX public.

According to numerous court records that FTX previously submitted to the bankruptcy court, FTX may owe more than 1 million creditors money, with the top 50 due approximately $3.1 billion and the top 10 owed $1.45 billion. FTX just needed three and a half years to go from its beginnings to a trading volume of more than $700 billion, followed by bankruptcy.

Yu Jianing thinks that the main reason FTX became popular was because of its own power and network of resources, which allowed a lot of people to sign up for trading on its platform. However, FTX failed to deposit user funds in a separate segregated account and even misappropriated nearly a dozen billions of user funds to Alameda Research for trading, resulting in significant losses. As a result, the asset side became insolvent and had a solvency problem since it was unable to meet user withdrawal requests.

The new wave of cryptocurrency exchanges is typified by FTX. The SEC regularly regulates the growing centralized trading paradigm for a sizable class of crypto assets because it is more concerned with the authenticity and security of transactions. Both the profit model and the trading model of FTX are significantly more open and transparent than those of their forebears and the previous generation of cryptocurrency exchanges.

“However, the legitimacy of FTX O&M in American legal systems does not conceal the widespread flaws in the product designs of this company. In comparison to the broader category of traditional U.S. financial assets, emerging crypto assets are still less open and transparent, and the volatility within the crypto currency ecosystem is challenging to control as well as complicated and perplexing.

Aftershocks of FTX Bankruptcy Still Remain

What consequences may a bankruptcy by FTX have? Jayz predicts a number of liquidation or bankruptcy chains, as well as intense operational pressure, for cryptocurrency enterprises who are financially connected to FTX. Second, the chain will experience a liquidity crisis if the project owners deposit assets that cannot be withdrawn, forcing them to sell other assets in order to secure the project. This will also cause market instability and future development.

For instance, the bankruptcy of bitcoin lender BlockFi, NFT large whale, and CEO of Chain Protocol Deepak was brought on by the demise of FTX. Chain Protocol’s eight-figure exposure to FTX is causing the project liquidity issues, according to eth, which will be fixed by selling its NFT holdings.

Additionally, a number of significant organizations sustained significant losses and might no longer have faith in the cryptocurrency sector. Significant investors in FTX included Sequoia Capital, BlackRock, Tiger Global, SoftBank Group, and Ontario Teachers’ Pension Fund; with FTX’s bankruptcy, all of their holdings are now worthless.

The largest pension fund in Canada, CPP Investment (CPPI), declared that it would stop looking into investment prospects in the bitcoin market as a result of the incident and reallocate its employees to other tasks.

Three different lawsuits have been consolidated, a new judge has been appointed in Miami, and U.S. District Court Judge Michael Moore of the Southern District of Florida will preside over the case. The class action lawsuit is against former FTX CEO SBF and a number of paid celebrity endorsers of FTX (including NFL player Tom Brady, comedian Larry David, tennis player Naomi Osaka, etc.).

With stricter regulation of the crypto business in numerous nations, the industry will face more compliance issues in the future. An inquiry into FTX has now been publicized by the appropriate regulators, and a regulatory policy for the entire industry may follow. This will make many ongoing projects more difficult. According to Jayz, compliance is always a requirement and is an unstoppable trend in the global crypto asset industry that will lead to mainstreaming, compliance, and institutionalization.