Financial news

“We allege that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto,” said SEC chair Gary Gensler.

The arrest is the first formal legal action taken against Bankman-Fried by the US, more than a month after FTX filed for bankruptcy. It also came on the eve of his first Congressional hearing into the collapse of the crypto exchange.

Does that mean he won’t testify?

Probably. Congressional aides said late on 12 December they no longer expected Bankman-Fried to testify but that FTX’s current chief executive, John Ray III, would likely still appear before the committee.

Ray, FTX’s new chief executive, said in testimony prepared for the 13 December hearing that FTX’s collapse “appears to stem from the absolute concentration of control in the hands of a very small group of grossly inexperienced and unsophisticated individuals”.

They failed to implement controls “that are necessary for a company that is entrusted with other people’s money or assets”, Ray wrote.

Bankman-Fried has made a number of public appearances in recent weeks, and has denied knowingly commingling customer funds with FTX’s own.

Headlines this week

Watchdog urges banks to treat crypto with caution as sector turmoil continues

Sam Bankman-Fried’s parents were there for his rise. Now they’re there for his fall

FTX collapse sparks calls for more SEC legal action against crypto exchanges

Workers go cold on crypto

As if the last few weeks hadn’t been bad enough for crypto companies, it now looks like a growing number of people are going cold on the industry. FN spoke to dozens of current and former staff at some of the biggest crypto exchanges, many of whom said they want out. 

“I wouldn’t be open to working in crypto again,” said David Donnelly, a former compliance analyst at Coinbase in Dublin, who chose to leave the firm in August after 14 months in the job. “I feel all markets are volatile at the moment, but crypto to me seems to be the most volatile, so I will be happy to give it a miss.”

Crypto workers turning their backs on the sector comes amid a shrinking jobs market. London companies posted 161 permanent jobs for people with blockchain skills in the three months to 7 December, down from 331 for the same period in 2021, according to data firm IT Jobs Watch.

One UK-based software engineer who lost their job at Kraken in late November, said they were “not too sure” if they should take another role in the industry given the uncertainty.

There are “quite few opportunities within [the] crypto space,” the staffer, who was in a manager-level role at the exchange, told FN. “Seeing so many layoffs within [the] crypto market including myself from Kraken, why would I get a job in crypto again?”

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