As a reminder, cryptocurrency exchange FTX filed for bankruptcy in early November. Right before that, the founder and now former CEO of the trading platform Sam Bankman-Fried was even ready to sell the company to Binance, but the deal never took place. A little later it turned out that FTX had had serious financial problems long before the collapse.

However, the key problem in the FTX story was the use of cryptocurrency exchange users’ funds without their knowledge. According to the prosecution, Sam Bankman-Fried and his colleagues took care to create a so-called backdoor, which allowed the unnoticed withdrawal of the platform’s users’ funds to the accounts of Alameda Research, a trading platform also founded by Sam. The money was then used both for the personal needs of the giants’ executives and for other purposes.

In particular, the money was used to fund politicians, buy real estate, and secure trading positions for representatives of Alameda Research. In addition, executives were able to take out loans using these sums, and in fairly large quantities.


It should be noted that last week, donations to politicians from Sam and his colleagues became the subject of new accusations against company representatives. In this case, there have been around 300 cases of illegal donations to politicians, and the donations themselves amount to tens of millions of dollars.

According to the prosecution, a "fake donor" scheme was used and corporate funds were also involved. Bankman-Fried was also able to circumvent restrictions on the amount of individual contributions to candidates.


As a result, Avalanche spokesperson Emin Gun Sirer sees Sam as one of the main culprits of the dire consequences that the cryptocurrency industry is yet to face.

What will happen to the cryptocurrency industry

Here’s a quote from Cyrer, which he voiced during an on-air gm podcast from Decrypt.

The damage Sam has done is immeasurable. Everything we’ve built over many, many years of hard work has just been usurped by some guy who comes in and plays the boy genius.

Before his bankruptcy, Bankman-Fried had indeed gained a reputation as a young billionaire, as he among other things appeared more than once in Forbes’ rankings as one of the world’s most promising businessmen. In particular, in 2022, the market was in a bearish trend and many cryptocurrency companies were barely making ends meet. Despite this, Sam was regularly touted as the ‘saviour’ of the industry, handing out loans to what he saw as promising firms. As we can now see, such sums may have been generated by the users of the stock exchange.

In other words, Sam was creating an image of a “good samaritan” while the FTX balance sheet was crumbling due to fraudulent management and Sam himself among others. The second problem was lobbying in the US Congress on his part. After the collapse of FTX, it emerged that Bachman-Fried was actively sponsoring both political parties in the country.

This reputation as a billionaire genius has “put to sleep” the public’s attention on what was going on behind the scenes of Bachmann-Fried’s crypto empire. Cyrer believes that it will now have to forge a dialogue with regulators to minimise the bankruptcy damage to other cryptocurrencies. He continues.

It is important to convey that what happened to FTX is the collapse of a centralised organisation, not the collapse of crypto itself “in any form”.

There is a silver lining to what happened – for example, Sam “wasn’t given the runaround” for the next few years. Cyrer noted that if FTX had managed to survive 2022, the exchange would still be bankrupt in the future. However, in that case, the consequences of its collapse would have been far more extensive.

In addition to Bankman-Fried’s reputation, Cyrer mentioned another interesting phenomenon of the last couple of years – the so-called “Sam-Tokens”. These are crypto projects that were either actively promoted on FTX, or that Bankman-Fried simply mentioned on his social media accounts. On the back of such comments, they tended to rise in value. In this context, the head of Ava Labs left the following remark.

We have never been a Sam-Token, and so have stayed away from all this madness. Thanks to our good fortune for that.

Ava Labs is the company that is developing the Avalanche altcoin (AVAX). Today, the token ranks 18th in cryptocurrency capitalisation, well AVAX has really barely featured in infospace in association with Sam Bankman-Friede.


We believe that the activism of cryptocurrency exchange FTX management and trading company Alameda Research has indeed created quite a few problems for the niche coin's reputation. However, since the collapse of those companies, the industry has shown signs of a successful recovery, as both trading volumes on exchanges and NFT transactions are gradually going up. It can therefore be assumed that the worst for the niche is over. And in the event of a strange regulatory revival, as is already happening with the SEC, full-fledged decentralised platforms will remain the favourites one way or another.