By Dante Bosnic


In the latest shake-up in the tumultuous cryptocurrency industry, FTX announced it was filing for bankruptcy on November 9th.[1] The crypto exchange that had celebrities and crypto fans changing their social media profile pictures to add laser beam eyes is now defunct. The downfall started two days earlier, when rival crypto exchange, Binance, announced it would not be bailing out its competitor, who was facing a liquidity crunch.[2] In a statement from a Binance spokesperson, the world’s largest crypto exchange cited the recent news reports regarding FTX’s mishandling of customer funds: “As a result of corporate due diligence, as well as the latest news reports regarding mishandled customer funds and alleged U.S. agency investigations, we have decided that we will not pursue the potential acquisition of” [3] The alleged mishandling of funds has sparked the SEC to probe into FTX, after they had already been investigating the company for months.[4]

The allegations regarding mishandling of customer funds revolve around the exchange’s trading house, Alameda Research, which allegedly burned through nearly $10 billion in cash that technically belonged to FTX’s customers.[5] To make things even worse, an Oklahoman man, Edwin Garrison, filed a class action lawsuit on behalf of FTX users naming not only the CEO Sam Bankman-Fried, but also a slew of celebrities including Tom Brady, Gisele Bundchen, Stephen Curry, the Golden State Warriors, Shaquille O’Neal, Udonis Haslem, David Ortiz, Trevor Lawrence, Shohei Ohtani, Naomi Osaka, Larry David, and Kevin O’Leary.[6] In the complaint, the plaintiffs allege that FTX customers are owed over $11 billion in damages because FTX engaged in false representations and deceptive conduct.[7] A portion of these allegations are based on the idea that FTX deceived customers into investing with the company by using the named celebrities to promote the exchange.[8] In one example, the complaint points to Steph Curry’s #notanexpert advertisement campaign in which Curry states, “I’m not an expert, and I don’t need to be. With FTX I have everything I need to buy, sell, and trade crypto safely.”[9] To take it even further, the complaint alleges that the FTX Platform was a “Ponzi scheme” that “shuffled customer funds” between its entities and used new investor funds to pay off its debt to “maintain the appearance of liquidity.”[10]

But the impact of the collapse of FTX doesn’t stop there. According to Politico, FTX executives contributed to dozens of lawmakers as the 2022 midterms approached.[11] Bankman-Fried alone spent around $37 million during the last election cycle, making him the Democratic Party’s second-largest donor, with the most significant donation being $27 million to a Democratic political action committee called Protect Our Future.[12] He also donated more than half a million dollars to the Democratic National Committee and made maximum donations to many individual candidates, including Republican senators John Hoeven (R-N.D.) and John Boozman (R-Ark.). Last spring, he pledged to spend upwards of $1 billion if Donald Trump ran.[13] Ryan Salame, Co-Chief Executive Officer of FTX Digital Markets, spent $19 million all on Republican candidates, making him the GOP’s 100th largest donor.[14] Because of the allegations against FTX, lawmakers have been prompted to donate the equivalent they received from FTX to charity.[15]

While it is too early to tell the future for Sam Bankman-Fried and his defunct crypto-exchange, the cryptocurrency industry has seen an immediate effect. FTT’s price has dropped about 90 percent.[16] The price of Bitcoin is down about 19 percent this month, and Ether is down about 24 percent. While it seemed like cryptocurrency was starting to be accepted by regulators, investors, and ordinary customers, the fall of FTX has certainly harmed that belief.[17] Going forward, it will be interesting to see how FTX’s competitors try to convince the world that they can be trusted.





[1] David Yaffe-Bellany, Embattled Crypto Exchange FTX Files for Bankruptcy, N.Y. Times (Nov. 11, 2022),

[2] Kevin Reynolds, Binance Walks Away From Deal to Acquire FTX, CoinDesk (Nov. 9, 2022, 3:50PM),

[3] Id.

[4] Paul Kiernan, SEC, DOJ Investigating Crypto Platform FTX, Wall St. J. (Nov. 9, 2022, 7:28PM),

[5] Rudy Takala, Will SBF Face Consequences for mismanaging FTX? Don’t count on it., Cointelegraph (Nov. 15, 2022),

[6] Complaint at 2, Garrison v. Bankman-Fried (2022).

[7] Complaint at 2, Garrison v. Bankman-Fried (2022).

[8] Jeff John Roberts, Tom Brady, Gisele Bundchen, and Steph Curry among celebs sued over FTX ‘Ponzi scheme’, Yahoo (Nov. 16, 2022, 2:58PM),

[9] Complaint at 25, Garrison v. Bankman-Fried (2022).

[10] Complaint at 4, Garrison v. Bankman-Fried (2022).

[11] Sam Sutton, Lawmakers return FTX money, Politico (Nov. 15, 2022, 1:58PM),

[12] Dan Primack & Alexi McCammond, Bankman-Fried spent millions on Dem campaigns, Axios (Nov. 15, 2022),

[13] Id.

[14] Id.

[15] Sutton, supra note 11.

[16] Kailey Huang, Why Did FTX Collapse? Here’s What to Know., N.Y. Times (Nov. 10, 2022, 11:57AM),

[17] Kailey Huang, What Happened to FTX? Here’s What to Know., N.Y. Times (Nov. 10, 2022, 10:45AM),



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