Sam Bankman-Fried (SBF), the Founder and Chief Executive Officer of FTX crypto exchange, was until recently considered a visionary of the digital market. However, after the collapse of his crypto empire, he found himself on the brink of bankruptcy . Now, SBF is looking for defence attorneys in connection with an investigation by the US authorities.
Reuters reported that a spokesperson for SBF confirmed the former billionaire had found a defence attorney. Caroline Ellison, the former CEO of Alameda Research, which was part of Bankman-Fried's conglomerate, has decided to take a similar step.
SBF will work with Mark S. Cohen of the law firm Cohen & Gresser. Ellison has hired the Washington-based firm of Wilmer Cutler Pickering Hale and Dorr.
The FTX exchange, one of the largest in the world, filed for bankruptcy last month after a liquidity crisis caused the loss of at least $1 billion in funds belonging to customers.
Proceedings for the bankruptcy of FTX and the SBF business are underway in the United States and the Bahamas. Other jurisdictions may soon begin their investigations as the affected customers spread worldwide. It should be noted that US authorities have not brought a current indictment, and SBF and Ellison face civil lawsuits from FTX clients.
However, US authorities are gathering information on FTX's activities. Investors are being contacted by federal prosecutors in New York, the Securities and Exchange Commission (SEC) and the police.
FTX's problems began through the Alameda Research crisis. The exchange tried to cover up the trading firm's insolvency with funds belonging to its clients. However, SBF suggested in a recent interview he never wanted to commit fraud.
FTX Sank Crypto Companies
The collapse of FTX showed that more than 100 companies in the cryptocurrency space had ties to SBF businesses. The widespread panic of investors who began withdrawing their funds increased the negative sentiment and caused a rash of more bankruptcy filings.
BlockFi, a cryptocurrency lending firm founded in 2017, filed for Chapter 11 bankruptcy protection over a week ago. Additionally, the proceeding includes eight of the firm's affiliates . Moreover, the company is taking SBF's Emergent Fidelity Technologies to court for seizing Robinhood shares pledged to the cryptocurrency lending service as collateral.
BlockFi showed in the bankruptcy filing that it has assets between $1-10 billion and liabilities in a similar range. The number of current creditors exceeds 100,000.
