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The crypto and blockchain world is known for bringing decentralized finance and transparency to the financial industry. At the same time, it’s also been plagued by bad actors, which has tarnished its image. While some of these individuals are in jail, others are still operating freely.
While it’s impossible to eliminate bad actors from the crypto industry, identifying patterns can help us anticipate what may come next. Here’s a closer look at five of the sector’s most notorious villains.
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Sam Bankman-Fried , once a crypto poster boy, became a disgraced cryptocurrency executive after being convicted on seven fraud and conspiracy charges for stealing at least $10 billion from customers and investors in the dramatic collapse of the crypto exchange FTX.
Born in 1992 in California, Bankman-Fried grew up in an academic family, with both of his parents professors at Stanford Law School. He earned a physics degree with a minor in mathematics from MIT in 2014. While an undergrad in 2013, he worked as an intern for the trading firm Jane Street Capital in New York. It was there that he met Caroline Ellison, who later became his girlfriend. Ellison became the CEO of Alameda Research, a quantitative cryptocurrency trading firm and SBF’s first company, founded in 2017. It was later discovered that he built FTX to support Alameda’s trading business.
In November 2022, it was revealed that FTX’s financial health was poor and the company was in the midst of a liquidity crisis . FTX quickly collapsed, resulting in a loss of $10 billion in customer funds. This had a ripple effect on other crypto companies, throwing them into financial turmoil.
Bankman-Fried was sentenced to 25 years in prison on March 28, 2024.
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Binance founder Changpeng Zhao, or “CZ,” was sentenced earlier this year to four months in prison for allowing rampant money laundering on the world’s largest cryptocurrency exchange.
In November 2023, Binance and then-CEO Zhao pleaded guilty to money laundering charges for allowing customers in other countries to transact in violation of US sanctions. As part of the settlement, the company agreed to pay $4.3 billion in fines, and Zhao agreed to pay a fine of $50 million and step down from his post.
Richard Teng, Binance’s regional director markets head and a former Abu Dhabi regulator, has since taken over as CEO. He is making some major changes in the firm, like searching out a headquarters location , which counters Binance’s one-time stance that a decentralized firm does not need an office. The crypto exchange might be signaling to authorities that it is rebuilding itself after Zhao’s departure.
Do Kwon 
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Crypto company Terraform Labs’ co-founder Do Kwon was once a king of the crypto world , but now he is awaiting extradition to the U.S. or South Korea, where he could face charges.
Terraform Labs collapsed in 2022, which had a significant impact on the cryptocurrency world. Terraform’s stablecoin, TerraUSD (UST), was tied to the cryptocurrency Terra (LUNA), which means $1 UST was always worth $1 USD of Luna. However, in May 2022, the value of LUNA plummeted from over $120 per coin to nearly zero, resulting in a loss of over $50 billion in UST/LUNA market capitalization and triggering a crash that wiped $400 billion in value from the wider crypto market.
The SEC filed a case against Terraform and Kwon regarding the deceptive promotion and sale of crypto tokens, particularly the algorithmic stablecoin TerraUSD (UST).
Kwon was arrested in March 2023 for forging travel documents while attempting to leave the southern European country Montenegro. Earlier this year, he agreed to pay $4.47 billion to settle a civil lawsuit filed by the U.S. Securities and Exchange Commission.
Screenshot: Roger Ver ( Other )
Early crypto investor Roger Ver, a.k.a. ‘Bitcoin Jesus,’ was once known for promoting Bitcoin and preaching to people about other cryptocurrencies. He is also known to be one of the biggest owners of Bitcoin . But earlier this year he was charged with a tax fraud , with the Department of Justice saying he evaded nearly $50 million in taxes.
Born in California, Ver renounced his US citizenship in February 2014 to become a citizen of St. Kitts and Nevis, a dual-island nation located between the Atlantic Ocean and the Caribbean Sea.
According to the indictment , Ver failed to report the 131,000 Bitcoin he owned in 2014 when he renounced his citizenship. Using this method, Ver is alleged to have evaded taxes.
As of July 9, Bitcoin is trading at around $56,000, which means Ver’s 131,000 Bitcoin are worth about $7.3 billion.
Screenshot: Ben Armstrong ( Other )
Ben Armstrong, formerly known as Bitboy, used to be the most popular cryptocurrency YouTuber globally, but now his empire has crumbled.
The New York Times reported that Armstrong once had $40 million worth of cryptocurrencies. However, he is now being accused of extortion, theft, sexual harassment, and workplace violence. Last August, Armstrong was ousted from his company, HIT Network. His wife soon filed for divorce, and he also lost his most beloved Lamborghini.
In 2023, the Bitboy Crypto brand relaunched as Discover Crypto .
