The Downfall of FTX ‘King of Crypto’ Sam Bankman-Fried
It took less than eight days for Sam Bankman-Fried, nicknamed the “King of Crypto,” to file for bankruptcy and face a possible federal investigation into how he handled the company’s finances.
Over the years, the internet has been flooded with lengthy interviews with him via video chat from his office desk in the Bahamas. Some of them make a distracting click.
The American entrepreneur’s voice is heard loud and clear as his interviewees listen attentively to his remarkable story of how he became a billionaire in five years. “Click, click, click.” It turns on and off quickly. Meanwhile, Mr. Bankman-Fried’s eyes circle around the screen.
It’s not clear from the video what he’s doing on his computer, but his tweets may give us some good clues. “I’m famous for playing League of Legends while on the phone,” he tweeted in February 2021.
Mr Bankman-Fried, former president of cornered cryptocurrency exchange FTX, is an avid gamer. And in a series of tweets sent to his close to one million followers, he explained why. Playing team fantasy
wargames was a way out of running two companies that trade billions of dollars a day.
“Some people drink too much and some gamble. I play leagues,” he said. Another anecdote about his game has resurfaced online as the 30-year-old’s cryptocurrency empire collapsed in dramatic fashion this week.
According to a blog post from venture capital giant Sequoia Capital, Mr. Bankman-Fried played an intense game of League of Legends during a high-level video call with his investment team.
But they didn’t seem to stop at all. The group has invested $210 million in Mr Bankman-Fried’s company, FTX.
This week, Sequoia Capital deleted that gushing blog post and announced that it is now writing off its FTX investments at a loss.
The company isn’t the only investor that has lost a significant amount of money since Bankman-Fried’s $32 billion empire collapsed.
FTX has about 1.2 million registered users using the exchange to buy Bitcoin and thousands of other crypto tokens.
From big traders to everyday crypto fans, many people wonder if they can get their savings back locked up in FTX’s digital wallets.
Brilliant autumn, Mr. The Rise of Bankman-Fried is a dramatic tale of risk, reward, and beanbags.
Bankman-Fried studied physics and mathematics at Massachusetts Institute of Technology (MIT), a prestigious American research university.
But the bright young undergraduate says the lessons he learned in his student residence set him on the path to becoming rich.
He recalls being swept up in the “Effective Charity” movement. Effective philanthropy, he said, is a community of people “trying to figure out what practical things you can do with your life to make as much positive impact on the world as you can.”
So, Mr. Bankman-Fried recalls, he decided to get into banking in order to earn as much money as possible in return for a good deed.
He briefly learned to trade stocks at a Jane Street trading firm in New York before he got bored and decided to experiment with Bitcoin.
He discovered the difference in the value of Bitcoin on various cryptocurrency exchanges and started arbitrage trading.
After making some profit for a month, he teamed up with some college friends to start a trading business called Alameda Research.
Mr Bankman-Fried says perfecting the art of how to move money in and out of banks and across borders wasn’t easy and took months. However, after about 3 months, he and his small team had great success.
“We’ve been very persistent,” he said on the Jax Jones and Martin Warner Show podcast a year ago. “We move on. If someone throws up another hurdle, we’ll get creative, and if the system can’t handle it, we’ll create a new system to get through that hurdle.”
As of January 2018, his team was making $1 million a day. A CNBC business reporter recently asked him how he was feeling. Intellectually and operationally, he said, it was “made to perfection”. “But the visuals surprise me every day,” he said.
Sam Bankman-Fried officially became a billionaire in 2021 thanks to his secondary and more famous business, FTX. Trading between $10 billion and $15 billion a day, this cryptocurrency exchange has become the world’s second-largest exchange and industry giant.
By early 2022, FTX is valued at $32 billion and a household name, backed by the company’s namesake NBA arena and celebrity endorsers such as NFL’s Tom Brady.
Meanwhile, Mr Bankman-Fried is happy to provide his Twitter followers with an insight into his lifestyle. He said he mostly sleeps on a beanbag next to his office desk and was photographed lying next to employees in the trading terminal.
Another posted early in the morning. “I can’t sleep. Go to the office “Mr. Bankman-Fried’s dream of donating large sums of money to charity was also on the way. In a BBC radio interview last month, he claimed to have donated “a few hundred million dollars so far”.
And his generosity was not limited to charity. In the past six months, the “King of Crypto” has been given another nickname, the “White Knight of Crypto.”
As cryptocurrency prices plummet in 2022, the so-called “cryptocurrency winter” will begin in earnest. While other companies in the industry were reeling, Mr. Bankman-Fried was handing out millions of dollars in bailout cash.
Asked why he would want to support a failed cryptocurrency company, he told CNBC, “If it’s a real pain and a real hit for us, it’s not going to be good in the long run. And it’s not fair to our customers.”
He also claimed in the same interview that he has $2 billion in reserve funds to help out failing crypto companies.
But last week, he himself toured the same industry to raise money to save his company and customers.
Questions about FTX’s true financial stability were raised after an article on the CoinDesk website suggested that Mr Bankman-Fried’s trading company, Alameda Research, was not an independent company but based on a foundation of coins discovered by FTX’s sister companies. She started walking. heritage
The Wall Street Journal further alleged that Alameda Research was using FTX’s customer deposits to trade loans.
However, FTX’s main competitor, Binance, began publicly selling all cryptocurrencies linked to FTX a few days later.
Binance CEO Changpeng Zhao told his 7.5 million followers that he would be selling Binance “in light of recent revelations”.
This led to a run on FTX as confused customers withdrew billions of dollars from cryptocurrency exchanges.
Withdrawals were suspended and Mr Bankman-Fried tried to get a bailout. Binance was considering going public at one point and then walked away.
Binance said the decision was influenced by reports of “allegations of misappropriation of customer funds and investigations by US agencies”.
A day later, FTX was declared bankrupt. In a series of tweets, Bankman-Fried said, “Once again, we’re very sad that we’ve come to this point.
“Hopefully we can find a way to recover things. Hopefully this will bring some degree of transparency, trust and governance.”
He also said, “I was shocked to see things work out the way they did.” The crypto world was and still is. The price of Bitcoin has fallen to a two-year low, and many are wondering what the downside might be next if FTX falls along with its bullish leader.
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