Mark Cuban: Former FTX CEO Sam Bankman-Fried Should ‘Fear Going To Jail’

Billionaire Mark Cuban has not given up on crypto despite the FTX implosion as one of the largest cryptocurrency exchanges in the world.

However, Cuban former FTX CEO Sam Bankman-Fried said in an interview with TMZ that “he should be afraid of prison for a long time.”

“I talked to the guy and thought he was smart,” Cuban told TMZ. “I didn’t know he was taking other people’s money and using it for personal gain.”

Alameda Research, founded by Bankman Fried, allegedly borrowed billions of dollars from FTX users’ accounts and traded the funds without their knowledge, CNBC reported. FTX also estimates how much money the user needs to have on hand if he wants to withdraw money.

Regulators require trading platforms to hold enough cash to match what customers deposit. And trading clients’ funds without their express permission is illegal, according to US securities laws.

Now, Bankman-Fried, along with celebrities like Tampa Bay Buccaneers quarterback Tom Brady and Golden State Warriors guard Stephen Curry, are named in a class-action lawsuit filed Nov. 15 in Miami.

The lawsuit alleges that FTX’s US customers lost about $11 billion and that the transfer enlisted celebrities to target “unsophisticated investors from around the country.”

FTX and Bankman-Fried did not immediately respond to CNBC Make It’s requests for comment.

Although the fact that FTX is based in the Bahamas complicates this case, since most of the defendants are based in the United States, this legal hurdle can be overcome, Yulia Guseva, head of Rutgers University’s fintech and blockchain research program, told CNBC Make It. .

However, US security laws are not equipped to prevent these problems from occurring, Guseva says.

As the case moves through the court system, the failure of FTX could have a domino effect on the entire crypto industry.

Following the failure of FTX, BlockFi, another distressed cryptocurrency lender, filed for Chapter 11 bankruptcy on November 28, the company listed an outstanding $275 million loan for FTX US.

In total, more than $1.3 trillion in value has been lost from the crypto market this year, and FTX’s collapse has only worsened the situation, analysts said.

“FTX’s bankruptcy and apparent fraud may have been the domino that fell,” said James Royal, chief correspondent at Bankrate.

“If new money stops flowing into crypto assets, their meteoric rise cannot continue,” he added.

Investors should note that unlike stocks and bonds, the value of cryptocurrencies is not asset-backed, Royal said. This is why the price is subject to volatility and unexpected ups and downs.

“Crypto only goes up if more people move money into the virtual asset, so it depends on investor confidence to keep the game moving,” he says.

Investors need to know how the exchange handles their assets or “they could be exposed to the same loss as FTX clients,” says Royal.

“If you’re going to continue to see cryptocurrency as a viable investment vehicle, you need to understand what the exchange’s legal obligations are to its customers,” he explains.

As for Cuban, he plans to continue investing in crypto and says it’s important to “separate the signal from the noise.”

“There were a lot of people who made a lot of mistakes, but it doesn’t change the main value,” he told TMZ.

Kuba believes that smart contracts, one of the key technologies that enable crypto-transactions, will have a significant impact on the creation of useful applications. Everyone can use it.

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Don’t miss it. FTX’s Sam Bankman-Fried lost billions and the company filed for bankruptcy – this could signal the demise of crypto, says expert

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