Everything to Know About FTX Founder Sam Bankman-Fried's Legal Controversies (Including the Celebs Involved)

Mar. 15, 2025

Photo: Ting Shen/Bloomberg via Getty

Introducing the man who went from billionaire to behind bars in a matter of days.

US Attorney Damian Williams, who heads the federal prosecutors' office in Manhattan that charged Bankman-Fried, deemed the case “one of the biggest financial frauds in American history.” The FTX founder was arrested on Dec. 12 in Nassau, Bahamas.

“From 2019 until earlier this year, Bankman-Fried and his co-conspiratorsstole billions of dollars from FTX customers,” Williams told reporters on Tuesday. “He used that money for his personal benefit, including to make personal investments and to cover expenses and debts of his hedge fund, Alameda Research.”

Forbes deemed Bankman-Fried “one of the richest people in crypto” before his FTX exchange and Alameda Research trading firms came crashing down. Additionally, he was formerly compared to finance figures J.P. Morgan and Warren Buffett.

While legal action has been taken against Bankman-Fried, others are also being investigated for potential involvement, including his ex-girlfriend Caroline Ellison. Furthermore, a number ofcelebrities are have been named as defendantsin a class-action lawsuit against FTX.

Here’s everything to know about the rise and fall of Bankman-Fried.

Who is Sam Bankman-Fried?

Tom Williams/CQ-Roll Call, Inc via Getty

While a student at MIT, Bankman-Fried interned at proprietary trading firm Jane Street Capital and retuned full-time after graduation. He quit in 2017 and moved to Berkeley, Calif., where he worked as the director of development at the Centre for Effective Altruism before co-founding Alameda Research with former Altruism co-worker Tara Mac Aulay a few months later.

The entrepreneur is notably regarded as the founder of cryptocurrency exchange FTX, which opened for business in May 2019. “Most of his wealth,which peaked at an estimated $26.5 billion, was tied up in ownership of about half of FTX and a share of its FTT tokens,” according toForbes.

Why did FTX collapse?

FTX Group entities (along with its 130 plus affiliates)filed for Chapter 11 bankruptcyon Nov. 11, 2022. Bankman-Fried tweeted the news, in addition to his decision to step down as CEO of the cryptocurrency exchange company.

Thefirm was forced to file for bankruptcy"after a run on deposits left FTX with an $8 billion shortfall" reports theNew York Times. “The damage has rippled across the industry, destabilizing other crypto companies and sowing widespread distrust of the technology.”

Alameda was intertwined, having accumulated a large “margin position” on FTX — or simply, it had borrowed funds from the exchange. “The liquidity crunch at FTX came after Bankman-Friedsecretly moved $10 billionof FTX customer funds to Alameda Research,” experts told Reuters.

During an Oct. 1 interview with ABC News' George Stephanopoulos, Bankman-Fried said that he was"vaguely aware"that FTX deposits were being funneled to Alameda. “I should have been on top of this and I feel really, really regretful that I wasn’t. A lot of people got hurt and that’s on me.”

Why was Sam Bankman-Fried arrested?

MARIO DUNCANSON/AFP via Getty

Bankman-Fried was arrested in the Bahamas (the country where FTX is based) on Dec. 12 after U.S. prosecutors filed criminal charges against him. The Southern District of New York, which is investigating the failed billionaire and his collapsed companies,confirmed the arreston Twitter.

Prior to his arrest,Bankman-Fried was planned to testifyvirtually before the House Financial Services Committee on Dec. 13. He has beenremanded in Bahamian custodyuntil February after a Bahamas judgedenied him bail.

Federal prosecutors charged Bankman-Fried witheight counts of fraud, money laundering and along with other financial crimes, per an unsealed indictment.

From these charges, Bankman-Fried is looking at apotential prison sentence of 115 years.

On Monday, Dec. 19,a lawyer for Bankman-Fried said that he agreed to drop his extradition fight, and was expected to return to the United States quickly for an arraignment and bail hearing.

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Who is Sam Bankman-Fried’s ex-girlfriend?

Bankman-Fried was in a relationship with Caroline Ellison, named co-CEO of Alameda in 2021 after joining as a trader in 2018. While Bankman-Fried owned 90% of the firm at the time,it was Ellison who helmed Alameda at the timeboth companies collapsed.

Daughter of esteemed economists Glenn Ellison (head of economics at MIT) and Sara Fischer Ellison (economics department lecturer at MIT), Ellison is a numbers wiz herself. In addition to her love of Harry Potter (she read the second book independently at the age of 5), Ellison has anaffinity for effective altruism, like Bankman-Fried.

“Being comfortable with risk is very important,” Ellison — whoalso previously worked at Jane Street, where she met Bankman-Fried — said on a podcast in May. “There are a lot of people who are very smart, but aren’t good, necessarily, at the messy world of trading—especially crypto.”

With all the legal action surrounding Bankman-Fried, people are now wondering where Ellison falls in the matter (no mention of Ellison was madein thecriminal indictmentor theSEC’s civil complaint). A lawyer for Ellison did not immediately return a request for comment.

U.S. prosecutors and regulators have remained tight-lipped to date, but legal experts are continuing to look beyond Bankman-Fried as the only one involved.

Which celebrities are associated with FTX?

Tom Brady, Gisele Bündchen.George Pimentel/Getty

At the height of its success,FTX attracted several celebrities to promotethe crypto giant’s brand. It dominated the sports space, running star-studded commercials during the Super Bowl and purchasing naming rights to the Miami Heat’s arena.

Now, famed faces likeTom Bradyand ex-wifeGisele Bündchenare among a roster of celebrities who have been named as defendants in a class-action lawsuit against the bankrupt crypto-currency company FTX.

source: people.com