How Sam Bankman-Fried’s Crypto Empire Collapsed

How Sam Bankman-Fried’s Crypto Empire Collapsed
How Sam Bankman-Fried’s Crypto Empire Collapsed

Crypto billionaire Sam Bankman-Fried went from industry leader to villain in less than a week, losing most of his fortune, his $32 billion company went bankrupt and the Securities and Exchange Commission and under investigation for part of the judicial authorities. branch.

But in a lengthy interview after midnight Sunday, he was surprisingly calm: “It could be worse.”

The Bankman-Fried-built empire, once compared to financial giants like John Pierpont Morgan and Warren Buffett, has seen its cryptocurrency exchange FTX lose $8 billion due to an influx of deposits that collapsed last week after leaving . by bankruptcy The damage spread throughout the industry, destabilizing other cryptocurrency companies and generating mistrust in the technology.

Other than a few Twitter posts, messages to staff and the occasional message to reporters, Bankman-Fried, 30, hasn’t said much publicly this week. In an interview on Sunday, he expressed deep regret over FTX’s demise.

But he provided limited insight into the core issues revolving around him: FTX has funded dozens of client funds to support the trading company he founded, Alameda Research. Billions of dollars misused or not. The Department of Justice and the SEC study these relationships.

Bankman-Fried said Alameda has a large “margin position” in FTX. “It was a lot bigger than he thought,” he said. “The downside risks were really huge,” he said, adding that the positions were worth billions of dollars, but declined to provide further details.

However, Bankman-Fried agreed with criticism from the cryptocurrency community for expanding his business interests too quickly across a wide range of industries. He said that his other commitments caused him to miss signs that FTX was in trouble.

“If he was a little more focused on what he was doing, he could be more thorough.”

Bahamas-based Bankman-Fried declined to comment on his current whereabouts, citing security concerns. FTX and Bankman-Fried’s attorney did not respond to requests for comment.

The Bankman-Fried crash has taken the crypto world by storm. But there are worrying signs that his business empire is at stake and that his ambitions are beyond his capabilities, according to interviews with nine of his colleagues and business partners, and The New York Times. According to internal reports, it has been seen in recent months.

When he invested in the troubled cryptocurrency company and began making purchases earlier this year, he did not share information with key employees. When they told him he was too busy and advised him to hire more staff, he declined those offers. And in Washington, he pushed through an ambitious regulatory program by criticizing Changpeng Zhao, chief executive of rival exchange Binance.

None of these outside investors are on FTX’s board of directors, even though venture capitalists have invested billions in the company. Bankman-Fried lived a secluded life in the Bahamas, surrounded by a small group of colleagues, according to four people familiar with the matter. He and his entourage lived together in a penthouse in Albany, a 600-acre beach resort on the island of New Providence in the Bahamas.

Consequences of the fall of FTX
The sudden collapse of cryptocurrency exchanges has taken the industry by surprise.
Company in crisis: The new CEO of FTX, who helped run Enron after his demise, says he has never seen “a complete failure in company management like this” paddy field.
The scale of the crisis: FTX may be in debt to more than 1 million creditors, according to the first major lawsuit since FTX’s bankruptcy.
Investors under scrutiny: VCs and hedge funds have poured nearly $2 billion into FTX with no strings attached. Now they too have questions.
Philanthropic Collapse: The collapse of FTX dealt a heavy blow to the “effective altruism” movement closely associated with the company’s founder, Sam Bankman-Freed.
Asked if he trusts this small group too much, Bankman-Fried said he has about 15 close colleagues. He said.

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