10 of the Biggest Financial Frauds of the Past 25 Years

5. FTX

Estimated losses: Over $7 billion

The crypto exchange run by 30-year-old Sam Bankman-Fried collapsed in November 2022 after a liquidity crunch exposed that the firm, once valued at $32 billion, had been using customer deposits to fund risky bets through a hedge fund also controlled by Bankman-Fried.

FTX is now in bankruptcy proceedings, and Bankman-Fried has been arrested in the Bahamas and faces extradition to the United States on criminal charges of conspiracy to commit wire fraud, commodities fraud, securities fraud and money laundering. He faces up to 115 years in prison. His hedge fund, Alameda Research, faces separate accusations related to potentially illegal campaign donations.
The scandal has rocked the broader world of crypto investments, sparking dozens of investor lawsuits and pushing down the value of digital assets. The Senate Banking Committee held a hearing to examine the case and consider further regulations on the crypto industry.

In that hearing, John J. Ray, the CEO brought in to replace Bankman-Fried and unwind the company said it was a case of “old-fashioned embezzlement.”

“This is just taking money from your customers and using it for your own purpose,” he added. “Not sophisticated at all.”

(Image: Bloomberg)