Nov 11 (Portal) – Sam Bankman-Fried earned a reputation as a crypto industry savior when he bailed out two platforms earlier this year. But when FTX, the exchange he co-founded and ran until Friday, needed a lifeline, none was there.
Up until this week, the 30-year-old American was considered the darling of digital assets, having amassed billions in personal fortune by operating one of the world’s largest crypto platforms. But when traders rushed to withdraw funds from FTX, Bankman-Fried denied it, telling investors he was confident the company would be bailed out, according to a source familiar with the situation. FTX filed for bankruptcy on Friday. He apologized repeatedly.
“Nobody said anything was wrong with SBF,” said Marius Ciubotariu, co-founder of the Hubble Protocol, a decentralized lending platform. The company’s collapse caught markets by surprise because Bankman-Fried was seen as an enterprising founder who knew his way around flashy deals, he said.
Known in financial circles by his initials SBF, Bankman-Fried had become a prominent and unconventional figure in the industry. He wore his signature wild hair, T-shirts and shorts to podium appearances with statesmen such as former US President Bill Clinton and former British Prime Minister Tony Blair, as well as supermodel Gisele Bundchen. Bankman-Fried also quickly became one of the largest donors to Democrats in the United States, contributing $5.2 million to President Joe Biden’s 2020 campaign.
The crypto prodigy started his career at Jane Street Capital, a decision he said was influenced by a desire to make money to pursue his interest in effective altruism, a movement that encourages people to prioritize donations to charities to grant
He has amassed a fortune that Forbes valued at $26.5 billion a year ago by exploiting Bitcoin price differentials in Asia and the United States. Bankman-Fried eventually founded crypto trading firm Alameda Research in 2017 and founded FTX a year later. It was valued at $32 billion in January.
The FTX meltdown sent Bitcoin to a two-year low this week amid fears the company’s troubles will spread to other crypto firms. Staff were caught off guard by his breakdown, and some sent apologetic letters to customers expressing their shock at what had happened, according to a person familiar with the matter.
FTX on Friday appointed John J. Ray III, a restructuring expert, as CEO. He oversaw the liquidation of Enron, the energy trading giant that collapsed in scandal and bankruptcy in 2001.
“A lot of people have compared that to Lehman — I would compare it to Enron,” former Treasury Secretary Larry Summers said in an interview with Bloomberg TV.
Despite all of his recent celebrity endorsements, notoriety, and big-name backers, Bankman-Fried was not confident about FTX’s prospects in his early days.
“I thought we were going to fail,” Bankman-Fried said at a conference in June, weeks before FTX and Alameda extended lifelines to two struggling crypto platforms. “I thought we were going to fail because no one would ever use it.”
Reporting by Hannah Lang in Washington; additional reporting by Anirban Sen in New York; Edited by Lananh Nguyen and Stephen Coates
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