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Last week, Sam Bankman-Fried was given a 25-year prison sentence for deceiving customers and investors through his failed crypto exchange FTX. In addition to the prison time, he has been ordered to repay over $11 billion. This hefty sentence is expected to have long-lasting financial consequences for him.
Securing compensation for victims of white-collar crimes can take a long time. However, Zach Bruch is determined to do just that. Bruch, a major FTX creditor, has been chosen by the US Department of Justice to be a part of the FTX Creditors’ Committee. In this role, he is focused on recovering the money that customers lost.
DOJ-appointed creditor committees typically include individuals and businesses that hold the seven largest unsecured claims against the debtor, which is FTX in this instance, as stated by the agency.
Moreover, Bruch, an experienced figure in the cryptocurrency industry, recently introduced his new startup cryptocurrency casino called MyPrize to the public. The company is valued at $140 million and has received investments from Dragonfly, Mechanism Capital, Arrington Capital, and a16z Scout.
Before the Bell spoke with Bruch about Sam Bankman-Fried, FTX, MyPrize and the future of crypto.
This interview has been edited for length and clarity.
Sam Bankman Fried was recently sentenced to 25 years in prison. Do you think this is fair?
Zach Bruch believes that over a million people were affected by Sam's actions, causing financial and emotional harm. No amount of time behind bars can fully compensate for the damage caused. Zach sympathizes with all the victims and is dedicated to assisting in recovering what was lost.
The collapse of FTX had a significant impact on me. On the same day, I underwent a major root canal procedure involving multiple root canals. When I returned home, I was experiencing a lot of pain and could not speak properly. Soon after, I received a phone call informing me about potential withdrawal issues on FTX. I was advised to try to withdraw my money as soon as possible. Despite the discomfort from my dental procedure, I made my way to my computer and attempted to withdraw funds from FTX. Unfortunately, I was unable to complete any withdrawals.
I immediately took action by contacting my lawyers to explore any potential solutions. Unfortunately, there was nothing that could be done. I accepted the risks involved in the trade and realized I needed to move forward. My main focus was on achieving the best possible recovery for all creditors, not just for myself. This is why I agreed to join the FTX Creditors’ Committee when the Department of Justice approached me. I am committed to doing everything in my power to ensure the best recovery for every creditor and strive towards making everyone whole.
In response to claims made by Sam Bankman Fried's defense that FTX customer losses were "zero" because the estate is confident in making customers whole, how do you address this?
In my opinion, the main aim is to ensure that every customer receives full compensation for their losses in the exchange. However, it's important to note that no amount of money can bring back the time or alleviate the emotional pain they may have endured. Regardless of their financial status, all those who were affected were victims of a terrible situation.
With Bitcoin surpassing the $70,000 mark and analysts adjusting their price targets to $83,000, many are wondering if the crypto winter is finally coming to an end. The question now is, what will happen next in the world of cryptocurrency?
When I consider the overall crypto markets, I focus on the long-term future rather than just short-term fluctuations. I have been involved in this industry since 2010 and have witnessed significant growth. I believe that an increasing number of individuals will join the crypto community as they recognize the value and benefits of this space.
Can you share more details about your new online gambling project, MyPrize? Are you personally interested in gambling as well?
I have always been a big risk taker, working at top crypto trading desks and growing to become one of the largest individual crypto traders. Now, I am exploring the gambling and gaming industry, which is a trillion-dollar market with less than $100 billion online.
Seeing the similarities to crypto exchanges and trading desks, my team and I are confident in our ability to create an engaging product. Just like in crypto, we understand the importance of risk management, user accounts, money laundering, fraud risk, and compliance. These are all areas we have experience in, having worked in high-stigma industries like crypto. Gambling also carries a similar stigma.
I think over the next three to five years, you’re going to see a lot more online gambling.
US inflation ticked higher last month, reversing some recent progress
My colleague Elisabeth Buchwald reports that the most recent US inflation report reveals that increasing prices are still impacting American consumers.
The Federal Reserve's favorite inflation measure, the Personal Consumption Expenditures price index, rose by 2.5% in the 12 months leading up to February. This growth rate was slightly faster than the 2.4% increase seen in January, but it matched the predictions made by FactSet.
Last month, energy prices surged by 2.3%, causing the annual inflation rate to rise.
According to data from the Commerce Department released on Friday, the Fed is now farther away from reaching its 2% inflation target. However, Fed Chair Jerome Powell remained unfazed by the news.
Powell mentioned at an event hosted by the San Francisco Fed that the data was mostly as expected and it's a positive sign when data matches the central bank's predictions. The latest inflation data is not expected to change the Fed's decision to lower interest rates in the future.
Central bankers, such as Powell, have indicated that reaching a 2% inflation target may not be smooth sailing.
In a recent speech titled "There's Still No Rush," Fed Gov. Christopher Waller stressed the importance of patience.
Recent inflation readings suggest that it may be wise to keep the current interest rate at its restrictive level for a longer period to ensure that inflation stays on track towards the target of 2%.
The Federal Reserve officials have planned three rate cuts for this year, with expectations that the first cut will likely happen in June.
Six journalists working for independent media outlets in Russia were arrested in a span of just a few hours this week on the eve of the anniversary of American reporter Evan Gershkovich’s detention in the city of Yekaterinburg. Russia is rounding up more journalists a year after the arrest of Evan Gershkovich.
Antonina Favorskaya, a journalist who reported on the late Russian opposition leader Alexey Navalny, was mentioned by Reporters Without Borders (RSF) on Thursday.
According to RSF, Favorskaya, who is a journalist for the independent Russian media outlet SOTA Vision, is facing accusations of "extremist activities" due to her coverage of Navalny and his activities.
Gershkovich has been in Russian detention for a year now. He was accused of espionage shortly after his arrest, a charge that he, his employer, and the US government strongly deny. He is the first journalist to face such charges since the Cold War, and the Russian government has not shown any evidence to support their claim.
Editor's P/S:
The recent 25-year prison sentence handed down to Sam Bankman-Fried for his role in the collapse of FTX has sent shockwaves through the crypto industry. While the victims of Bankman-Fried's actions deserve justice, it is important to remember that no amount of time behind bars can fully compensate for the financial and emotional harm they have suffered.
The efforts of Zach Bruch and the FTX Creditors' Committee to recover lost funds for victims is a step in the right direction, but it is likely to be a long and complex process. The crypto winter has had a significant impact on the industry, but there are signs of recovery on the horizon. As the crypto community continues to grow, it is important to remember the lessons learned from the FTX collapse and to prioritize transparency, accountability, and consumer protection. MyPrize, further demonstrates the potential for innovation and diversification within the crypto space.