FTX’s FTT Token Acquisition Leads to CEO’s Criminal Charges

• FTX used its own token, FTT, to purchase a majority stake in trading platform Blockfolio for $84 million in 2020.
• FTT was at the center of the downfall of the company founded by Sam Bankman-Fried after CoinDesk revealed in early November that sister firm Alameda Research’s balance sheet was full of the token.
• Bankman-Fried now faces criminal charges in the U.S., including wire fraud, conspiracy to commit money laundering and violating campaign finance laws.

In 2020, cryptocurrency exchange FTX made headlines when it used its own token, FTT, to purchase a majority stake in trading platform Blockfolio for $84 million. According to financial documents, around 94% of the amount was in the token invented by FTX, giving them a 52% stake in the trading platform.

However, this move would soon lead to the downfall of FTX when CoinDesk revealed in early November that sister firm Alameda Research’s balance sheet was full of the token, exposing the parlous state of its finances and the close ties between the two. This sparked a series of events that would lead to the eventual downfall of FTX, culminating in the disgraced former CEO, Sam Bankman-Fried, facing criminal charges in the U.S., including wire fraud, conspiracy to commit money laundering and violating campaign finance laws.

The Securities and Exchange Commission (SEC) has since declared FTT a security, meaning FTX could face further legal implications due to its sale of the token. FTX has yet to comment on the matter, but the SEC’s decision could have a significant impact on the company’s future.

FTX’s purchase of Blockfolio may have seemed like an ambitious move at the time, but it quickly turned into a cautionary tale of how the wrong decision can have devastating consequences. The story of FTX serves as a reminder for other cryptocurrency companies to tread carefully when it comes to investments and acquisitions.