It has been another crazy 48 hours in the collapse of FTX, once the second-largest cryptocurrency exchange in the world.

On Monday, the company’s now-infamous founder, Sam Bankman-Fried, was arrested in the Bahamas, a day before he was set to give testimony before Congress. On Tuesday US authorities issued damning charges that the 30-year-old former billionaire ran a “house of cards” and was behind “one of the biggest financial frauds in American history”.

Lawmakers went ahead with the hearing without Bankman-Fried, who was otherwise occupied, in what looks set to be a series of heated hearings about the collapse.

Here are five things we learned about FTX after two days of whirlwind of events.

1. What happened at FTX appears to be ‘old-school fraud’

While FTX was billed as a behemoth of cryptocurrency, with all the technical complexities that implies, officials on Tuesday alleged that FTX’s downfall is a classic case of fraud.

Republican representative and incoming House finance committee chair Patrick McHenry said in Tuesday’s hearing that FTX appears to be “old school fraud, just using new technology”.

In a statement, Gary Gensler, chair of the Securities and Exchange Commission (SEC), which charged Bankman-Fried of fraud against investors, echoed this sentiment by saying 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.

“FTX operated behind a veneer of legitimacy,” he said. “But we allege in our complaint that the veneer wasn’t just thin, it was fraudulent.”

John Ray III, FTX’s current CEO who was brought in to restructure the company, called it “really old-fashioned embezzlement” when testifying in front of the House Financial Services Committee on Tuesday.

When asked to contrast the liquidation of Enron in the early 2000s, which Ray oversaw, he said the crimes of the former energy giant were “highly orchestrated financial machinations by highly sophisticated people to keep transactions off balance sheets”.

FTX, in contrast, was “just taking money from customers, and using it for your own purpose,” he said. “Not sophisticated at all.”

2. Little is known about where all the money went

Ray told lawmakers that there is an “excess of $7bn” in lost FTX funds from 7.6m accounts, with 2.7m based in the US. It is unclear exactly how much money is lost.

“There were no corporate controls, no corporate oversight, no independent board,” he said. “The owners, business and senior management had virtual control of all the accounts and could move money or assets as they desired, undetected by customers.”

Ray said he had “never seen such an utter lack of record keeping” and there were “absolutely no internal control whatsoever”. FTX – which helped Bankman-Fried amass a personal fortune once valued at $26bn – used QuickBooks to manage its finances. “QuickBooks, very nice tool, not for a multibillion-dollar company,” Ray said.

3. Prosecutors believe Bankman-Fried was lying from the beginning

While Bankman-Fried built a reputation off his philosophy of effective altruism, saying he wanted to use his wealth to make a major positive impact on the world, prosecutors are alleging that Bankman-Fried was defrauding investors since he founded FTX in 2019.

“Bankman-Fried was orchestrating a massive, years-long fraud, diverting billions of dollars of the trading platform’s customer funds for his own personal benefit and to help grow his crypto empire,” the SEC said in its complaint.

The complaint describes how Bankman-Fried postured himself as a “responsible leader of the crypto community” and “touted the importance of regulation and accountability”.

“But from the start, Bankman-Fried improperly diverted customer assets to his privately-held crypto hedge fund, Alameda Research LLC, and then used those customer funds to make undisclosed venture investments, lavish real estate purchases, and large political donations,” the complaint reads.

4. What’s next for Bankman-Fried?

The criminal indictment that led to Bankman-Fried’s arrest was unsealed on Tuesday, revealing exactly what charges federal prosecutors have charged him with.

Bankman-Fried faces eight criminal counts, including wire fraud on customers and lenders, conspiracies to commit wire fraud on customers and lenders and conspiracies to commit commodities fraud, securities fraud and money laundering.

Bankman-Fried could face hefty prison time for the charges but legal experts say it is too early to say yet what sentence he will receive if convicted. Sentencing in white-collar crime is highly influenced by the scale of the fraud, said Duncan Levin, managing partner at Levin & Associates and a former federal prosecutor. Given that FTX’s losses “seem to be close to $2bn, that could drive sentencing to the absolute max,” he said.

But at the moment, said Levin, it’s hard to say whether if convicted Bankman-Fried is facing an “Elizabeth Holmes [11 years] or a Bernie Madoff [150 years]”.

5. Prosecutors are likely closing in on Bankman-Fried’s inner circle – and the scandal is spreading

Though Bankman-Fried is the only FTX associate who has been charged, US authorities are investigating others who were involved with the company.

At a press conference Damian Williams, United States attorney for the southern district of New York, said this was only the beginning. “This investigation is very much ongoing,” he said. “We are not done.” Officials advised anyone involved in the alleged fraud “to come to us before we come to you”.

But while US authorities are after FTX insiders, Washington faces its own reckoning. Bankman-Fried and his peers gave millions to politicians of both sides in the hope of steering crypto regulation. The political fallout of FTX’s collapse looks set to be one of the big stories of 2023.