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Source: Kate Irwin, Andrew Hayward
Original title: From $26 Billion to Nothing: The Rise and Fall of SBF and FTX
Summary:
- It is reported that the assets of FTX founder SBF are estimated to fall to almost zero from $16 billion earlier this week.
- The cryptocurrency exchange faces liquidity tightening and has been accused of misusing customer funds to compensate for trading losses.
As FTX collapses this week, founder and CEO Sam Bankman-Fried (SBF) quickly transforms from an idol in the cryptocurrency industry and the so-called "savior" to a disgraceful figure who may be responsible for billions of dollars in customer losses. Obviously he also lost all his property in the process.
Billionaires Index reported that the value of SBF's assets has dropped to nearly zero from $16 billion at the beginning of this week after news of FTX's bankruptcy filing. Bloomberg estimates that most of his assets are related to its subsidiaries, but he may have other assets that are not tracked by Bloomberg.
This spring, before the market fell, SBF's huge wealth in the cryptocurrency sector was valued at $26 billion. Bloomberg called his personal losses this week "one of the biggest wealth destruction events in history."
It is believed that there are billions of dollars in FTX's balance sheet. The exchange is accused of using customer funds to compensate for losses from Alameda Research, a trading agency owned by SBF. FTX suffered a liquidity crunch this week as users withdraw funds this week, causing its FTT token value to plummet. SBF resigned as CEO yesterday and announced the filing for bankruptcy protection.
SBF The Rise of the Crypto Empire
SBF was founded in 2017 and before the establishment of FTX in 2019, it obtained huge profits from arbitrage trading strategies . His popularity began to rise in 2020 as SBF was known as the “crypto savior” by the industry as the industry’s “crypto savior” as the founder of SushiSwap left the community.
FTX gradually grew in early 2021, but its popularity and trading volumes have accelerated significantly as the company began to show goodwill to mainstream markets through sports and celebrity leagues. In just a few months, FTX signed a 19-year, $135 million sponsorship agreement with Miami Heat and a 10-year, $210 million sponsorship agreement with esports club Team SoloMid. Celebrity athletes such as
Tom Brady (Tom Brady), Stephen Curry and Naomi Osaka also joined in and appeared in FTX's advertisements to endorse cryptocurrencies to more and more viewers. FTX's Super Bowl commercial starring comedian Larry David further fueled the trend this year.
has gone on the way, and the company has raised a lot of cash from investors: a $1 billion Series B financing in July 2021, another $421 million in October 2021, and another $400 million in January this year. This does not include raising funds for FTX US, an independent exchange serving U.S. users. FTX made its most recent funding in January this year, with a valuation of $32 billion.
under the spotlight
SBF's net worth and fame soared, and soon his wealth was estimated to reach US$26 billion. To celebrate his success, he appeared with Brady and model Gisele Bündchen (Brady's wife at the time) at the FTX's own encrypted Bahamas conference, and Bill Clinton and Tony Blair (Tony Blair) and others were also present.
SBF agrees with the effective altruism theory, essentially trying to make as much money as possible through FTX and cryptocurrency transactions, and ultimately donate it all for the benefit of the world.He also said that during the preparation phase of the 2024 presidential election, he may spend up to $1 billion on political donations , but eventually recovered that claim.
When the cryptocurrency industry was in trouble earlier this year, he stepped in very openly, "bailing out" companies like Voyager Digital and BlockFi that face bankruptcy due to the Terra crash.
In August this year, SBF said on Decrypt’s podcast that the bailout of Voyager Digital might have “spent $70 million in vain.” He didn't care much about this matter and didn't seem to expect the funds to be returned. “Basically, we know we might never see that $70 million again,” he told Decrypt.
These companies do not have much recourse now, and their executives may now hope others can help.
At the time, SBF's indifference might have caused red flags to some. But SBF is worth billions and put $750 million in emergency aid he provided to Voyager and BlockFi earlier this year as part of his “responsibility” as a cryptocurrency executive.
"I do feel that we have a responsibility to seriously consider intervening to stop the industry crisis from spreading further, even if it is a loss for ourselves." SBF previously told the U.S. National Public Radio Station (NPR). "Instantly we are not the ones that caused all of this, nor were we involved. I think it is healthy for the ecosystem, and what I want to do is help the industry grow and thrive."
collapse overnight
However, there are reports that behind the scenes, he improperly used the funds of FTX customers to curb Alameda's losses. However, when FTX customers began collectively withdrawing assets and FTT collapsed, the company found itself in a liquidity crisis. Competitor Binance originally intended to take advantage of to save the market, but gave up the plan after seeing the scale of the crisis.
Now, FTX and its affiliates have filed for bankruptcy protection, and SBF's net asset value has also shrunk significantly. SBF said he was "really sorry" about the whole chaos, but the encrypted users on Twitter were not bought into it, and FTX users could not accept it.
potentially worth billions of dollars of client assets are now mostly trapped in exchanges and could fall into bankruptcy for a long time. Most importantly, many companies, including BlockFi, are revealing their exposure to FTX, spreading the kind of encryption “contagion” that SBF has previously designed to block.
In addition, according to Reuters , two people familiar with the matter revealed that at least $1 billion in customer funds disappeared from FTX. SBF has transferred $10 billion of customer funds from FTX to Alameda Research, people familiar with the matter said. A person familiar with the matter estimated that the amount of unknown money was about $1.7 billion. Another person familiar with the matter said the amount was between $1 billion and $2 billion. The
FTX legal and financial team survey found that SBF implemented so-called "backdoors" in FTX's accounting system, which was built with customized software. This "backdoor" allows SBF to perform work that may change the financial situation of a company without reminding others, including external accountants. The setup, they said, means transferring $10 billion to Alameda, and did not trigger any internal compliance or accounting risk warnings on FTX. Reuters asked SBF to verify whether the news was true, denied using a "backdoor."
Currently SBF and FTX are under investigation by at least five U.S. regulators, namely: U.S. Securities and Exchange Commission (SEC), Department of Justice, Commodity Futures Trading Commission (CFTCh), Texas Securities Commission and California Department of Financial Protection and Innovation.
Editor in charge: Kate
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