Cryptocurrency exchange FTX and its founder and former CEO, Sam Bankman-Fried, are intricately entwined. The swift and damaging collapse of FTX in late 2022 will have repercussions on the international crypto community for years to come. According to a recent report by FOXBusiness, Some unlikely people and places are also grappling with what seems to be the dual realities of Bankman-Fried.
It’s hard to imagine that the school district of Broward County, Florida, would be mired in the controversy surrounding the FTX implosion. Yet the district and students who were on the receiving end of SBF’s charitable efforts find themselves in the middle of the mess — and possibly in the crosshairs of FTX’s bankruptcy trustee John Ray III, FOX Business has learned.
Broward County and its involvement with the SBF ecosystem at first seems insignificant to the magnitude of the alleged fraud and shock waves it has sent throughout the $1 trillion crypto industry. As much as $8 billion of customer money missing from supposedly safe accounts, used to finance unrelated activities, makes the fraud one of the biggest since Bernie Madoff’s Ponzi scheme more than 20 years ago. The notion that a key figure in crypto looted billions of dollars in purportedly safe client money added more uncertainty to a market that has lost half of its value since 2021.
The FTX collapse will certainly drive more regulation that could crush digital asset values further. SBF, for his part, has been arrested and charged with eight counts of fraud and faces up to 115 years in prison. He has pleaded not guilty.
Broward County, meanwhile, is hardly an epicenter of crypto. That can be found further south in Miami, which has become a hub of digital-asset innovation. But the story of the county’s involvement with FTX and the fallout from its collapse does provide a window into how the alleged scandal is roiling not just risk-takers in the crypto world, but also communities in middle-class America, a FOX Business investigation shows.
Students, in turn, are increasingly anxious. The reason: Bankruptcy lawyers say the hackathon money — some or all of the total $1.3 million FTX given to students and the designated “mentors” who participated with them — could be “reclaimed” by John Ray. , the new CEO of FTX and bankruptcy trustee. Ray is trying to pay off FTX clients whose money was allegedly stolen, prosecutors say, to fund SBF’s various commercial, political and charitable efforts.
Students, in turn, are increasingly anxious. The reason: Bankruptcy lawyers say the hackathon money — some or all of the total $1.3 million FTX given to students and the designated “mentors” who participated with them — could be “reclaimed” by John Ray. , the new CEO of FTX and bankruptcy trustee. Ray is trying to pay off FTX clients whose money was allegedly stolen, prosecutors say, to fund SBF’s various commercial, political and charitable efforts.
Ray did not return emails for comment. It’s unclear whether the money is within his reach, and it depends on when he can establish that SBF and his team have started tapping into client accounts to fund other activities. FTX has invested around $190 million in various charities and nonprofits since its launch in 2019, and in billing documents, regulators say the fraud started early on.
In addition, there is a precedent for returns from charities, bankruptcy experts tell FOX Business. Those who invested money in Madoff’s $65 billion fraud were forced to return the false profits they took from his fund after the Ponzi scheme was exposed in late 2008.
