BBC’s Panorama Downfall of the Crypto King: what led to Sam Bankman-Fried’s 2022 arrest?

Not a week since the release of ‘Dumb Money,’ which focused on the GameStop short squeeze, arrived in UK cinemas, another tale of the highs and lows of investment banking is set to arrive on our screens, with the BBC’s stalwart ‘Panorama’ program examing the rise and fall of ‘Crypto King’ Sam Bankman-Fried. 

‘Downfall of the Crypto King’ is set to tell the true story of Bankman-Fried’s meteoric rise to success as the founder of FTX, a cryptocurrency exchange known for its innovative features and wide range of trading products. Considered an investor on the up, things suddenly took a rapid change and deteriorated fast, leading not only to the dissolution of FTX but Bankman-Fried’s subsequent arrest.

Bankman-Fried resigned as CEO of FTX on November 11 and was replaced by John J. Ray III, known for his role in the bankruptcy and restructuring of Enron. One day after FTX declared bankruptcy, on November 12, Bankman-Fried was interviewed by the Royal Bahamas Police Force and finally on November 17, Ray stated in a sworn declaration submitted in bankruptcy court that according to the firm's records, Alameda Research had lent $1 billion to Bankman-Fried

He was arrested in December 2022 and faced multiple charges related to fraud, money laundering, and a litany of other financial crimes, while his bail was withdrawn also due to allegations of witness tampering before his trial.

But to get to this point, and ahead of Panorama’s broadcast of the rise and fall of the Crypto King, what did Sam Bankman-Fried do that led to his incredible fall from grace into the current situation he is in now - from Forbes ‘Rich List’ to his incarceration? 

What did Sam Bankman-Fried do that led to his arrest?

It all began when Binance CEO Changpeng Zhao announced his intention to sell Binance's holdings of FTX's token (FTT). This announcement sent shockwaves through the crypto market, causing a sharp drop in FTT's price. Adding to the tension, Zhao had criticized Bankman-Fried's lobbying efforts shortly before.

Further complicating matters, Binance revealed plans to acquire FTX due to a liquidity crisis, however, this deal fell through as Binance expressed concerns about FTX's handling of customer funds and ongoing investigations into the exchange. This turn of events led to a massive 80% loss in FTT's value.

Behind the scenes, anonymous sources alleged that Bankman-Fried had covertly transferred billions of dollars from FTX to Alameda Research, including customer funds, without proper disclosure. These transfers were purportedly backed by FTT and Robinhood shares.

Amid the chaos, FTX, Alameda Research, and associated entities declared bankruptcy, and Bankman-Fried resigned as FTX's CEO. The U.S. Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) initiated investigations into FTX and its connections to Bankman-Fried's financial dealings.

Things took a dramatic turn when Bankman-Fried was arrested in the Bahamas in December 2022. He faced a litany of charges, including wire fraud, securities fraud, money laundering, and more. If convicted on all counts, he could potentially serve a maximum prison sentence of 115 years.

Bankman-Fried consented to extradition to the United States and was released on an unprecedented $250 million bond under strict conditions, including confinement to his parents' home in California.

The legal saga continued to unfold as additional charges, including witness tampering and illegal political donations, were filed against him. His bail was temporarily revoked in August 2023, after the presiding judge believed that there was sufficient evidence to demonstrate witness tampering on behalf of the former ‘Crypto King.’

When is ‘Downfall of the Crypto King’ screening on the BBC?

The BBC Panorama investigation, ‘Downfall of the Crypto King,’ airs this evening (September 25 2023) on BBC One at 8pm BST. The programme will also be available to watch on BBC iPlayer after its initial broadcast.