Founder & Chief Executive Officer · FTX / Alameda Research
FTX customers deposited funds into a crypto exchange whose CEO also controlled the trading firm that was secretly using those same customer funds on the other side of the market.
The founder and CEO of a customer-facing exchange simultaneously controlled the trading firm on the other side of many transactions — a structural conflict that eliminated independent custody of customer funds.
Sam Bankman-Fried founded FTX, a cryptocurrency exchange, and simultaneously founded and effectively controlled Alameda Research, a crypto trading firm. According to his November 2023 conviction, Bankman-Fried directed the transfer of billions of dollars in FTX customer funds to Alameda Research — the trading firm he also controlled — which used those funds for trading, venture investments, and loans to executives. He was convicted on seven counts including wire fraud, securities fraud, and money laundering conspiracy.
FTX customers deposited funds believing they were held in segregated exchange accounts; court evidence established that customer funds were transferred to Alameda Research, the separate trading firm that Bankman-Fried also controlled.
Alameda used FTX customer funds for proprietary trading, venture investments, real estate purchases, and personal loans to FTX and Alameda executives — all without customer knowledge or consent.
The dual control — CEO of the exchange and effective controller of the firm that was borrowing from that exchange — created a conflict of interest that made independent oversight of fund movements impossible.
When crypto markets declined in 2022, Alameda's losses — funded in part by FTX customer deposits — left the exchange unable to honor customer withdrawals, triggering a collapse in November 2022.
The founder and CEO of a customer-facing exchange simultaneously controlled the trading firm on the other side of many transactions — a structural conflict that eliminated independent custody of customer funds.
An individual who controls both a financial custodian and a major trading counterparty of that same custodian represents one of the clearest possible conflict-of-interest structures. Identifying that the same person controls both the exchange holding customer funds and the firm borrowing from that exchange is a detectable, mappable relationship.
ConflictCheck does not claim it would have definitively prevented any specific historical fraud. The purpose of this section is to illustrate the type of relationship conflict present in each case and how structured disclosure processes address that category of risk.
Bankman-Fried was convicted in November 2023 on all seven counts. He was sentenced to 25 years in federal prison in March 2024 and ordered to forfeit approximately $11 billion.
Every case in this library began with a relationship that existed — undisclosed — before anyone was harmed. ConflictCheck helps map those relationships across your organization.