“I’ve had a bad month,” FTX founder Sam Bankman-Fried said in an interview Wednesday.
That’s an understatement for the ages. The cryptocurrency exchange’s spectacular collapse in the space of a dramatic week last month will go down in history. The fallout has been felt across the industry, with several companies, including crypto lender BlockFi, following FTX in filing for bankruptcy.
It’s becoming an existential crisis for crypto as a whole. Bankman-Fried was keen to insist that “what matters here is the millions of customers,” as opposed to his own predicament, in an interview as part of the New York Times Dealbook Summit.
But he remains at the center of the fallout, not least because he’s putting himself forward for interviews.
The 30-year old had a net worth of $26.5 billion at one point, according to Forbes, before the cryptocurrency exchange collapsed in spectacular fashion last month. He said he had $100,000 in his bank account last time he checked, in an interview with Axios Monday.
“Basically everything I had was just tied up in the company,” he said.
While Bankman-Fried’s fall from grace was devastatingly swift, his rise to multibillionaire status in the first place was also rapid.
After studying physics at Massachusetts Institute of Technology, Bankman-Fried joined quantitative trading firm Jane Street in 2014. Three years later he left the company and co-founded his own quantitative cryptocurrency trading firm Alameda Research. One of the company’s other co-founders Tara Mac Aulay said last month that she quit in April 2018 “in part due to concerns over risk management and business ethics.” She added that she hasn’t spoken to Bankman-Fried since 2018.
Laying the foundations for his crypto empire, Bankman-Fried founded FTX, a cryptocurrency derivatives exchange, in April 2019, along with Gary Wang, a former Google employee, who was also a co-founder of Alameda Research. The exchange launched the following month and quickly became one of the world’s largest and most important crypto trading venues. His empire, FTX Group, swelled to 130 entities, including Alameda Research.
Bankman-Fried’s net worth soared, partly aided by a boom in crypto assets during the Covid-19 pandemic. His wealth was tied up in owning around half of FTX as well as a share of the exchange’s digital currency FTT.
At its peak, FTX was valued at $32 billion after raising $400 million from investors, including Japanese investment giant SoftBank, in a funding round in January 2022.
It wasn’t just Bankman-Fried’s wealth that grew but his status as a leading respected figure in the space. But both came crashing down in dramatic fashion last month.
The demise began when CoinDesk reported a leaked Alameda balance sheet showing its dependence on the FTT token. Changpeng Zhao, CEO of rival exchange Binance, then said he planned to liquidate more than $500 million worth of FTT that his company owned.
What followed was something of an old-fashioned run, with customers withdrawing $5 billion from FTX in a single day. Bankman-Fried then raced to cover the estimated $8 billion shortfall. Binance signaled its intent to buy FTX, before pulling out the following day.
FTX filed for bankruptcy on Nov. 11. The bankruptcy court case has provided more details in recent weeks. At a court hearing last week, FTX lawyers said a substantial amount of customer funds were missing or stolen. State and federal agencies are now investigating FTX’s collapse and how exactly the firm managed to lose the assets.
When it comes to what the future holds for Bankman-Fried, it remains unclear. But his promise to donate billions of dollars over his lifetime to good causes is unlikely to be fulfilled.
Write to Callum Keown at email@example.com