Sam Bankman-Fried was the golden child of cryptocurrency.
A controversial company he co-founded called FTX was worth $15.6 billion to him.
Gisele Bündchen and Tom Brady co-starred in FTX’s $20 million ad campaign, in return receiving stock in the company along with cryptocurrency. NBA legend Stephen Curry was appointed as his global ambassador for the company in exchange for shares, and even got involved with his Eat.Learn.Play. Charity with the platform. Tennis star Naomi Osaka has acquired a stake. Angels pitcher Shohei Ohtani and Green Bay Packers pitcher Aaron Jones have signed on as global ambassadors and acquired shares.
For the 2022 Super Bowl, comedian Larry David was in an FTX commercial.
In the reported $30 million ad, David saw actors playing FTX executives begging him to invest via the company’s “safe and easy way to get into cryptocurrency.” I’m listening. Always skeptical and grinning, David replies: And I’m never wrong about this — never.
Bankman-Fried and his celebrity peers should have heeded that advice.
Now at risk of bankruptcy and complete collapse, FTX is rushing to underpin an $8 billion liquidity crisis that has left investors unable to claim funds. Stocks given to celebrities are worth very little. And Bankman Freed’s empire faces federal investigation over whether it mishandled customers’ money.
For Bankman-Fried, who was just 30 years old and expected to be one of the biggest donors to the Democratic Party in the 2024 presidential election, it’s a major downfall.
Now he’s eating humble pie.
“I failed, and should have done better,” said Bankman-Fried, who personally lost at least $13 billion in the fiasco. tweeted on thursday“The full story here is what I’m still fleshing out with all the details, but as a very high level, I failed twice.”
Bankman-Fried was raised near Palo Alto, California by two Stanford law professors, Joseph Bankman and Barbara Fried. After flipping a coin and choosing between MIT and his CalTech, he went to Cambridge, Massachusetts, where he studied physics and mathematics.
“What I learned in college ended up being useless… except for things like social development,” Bankman-Fried told Yahoo Finance. “But academically, it doesn’t help at all… school just doesn’t help most jobs.”
So in 2017, he forged a career of his own via a clever hack. We were able to take advantage of the price discrepancy to buy bitcoin cheap in Japan and sell it expensive in other countries. Within 18 months, he turned his $10,000 into his $1 billion.
In 2019, he launched the FTX crypto exchange with one partner. This promised a better and safer way for customers to purchase new currencies. Customers who bought “tokens” from FTX (called FTT) were able to sell their crypto at a discounted price on FTX.
Over the next few years, the boom in the FTX cryptocurrency exchange made Bankman-Fried even richer.
And A-list celebrities loved the smell of profit. to FTX.
The Miami Heat are also participating. The NBA team last year signed him to a $135 million deal to rename the stadium his FTX Arena for the next 19 years.
Bankman-Fried, meanwhile, donated large sums of money to politics, including $5 million to Joe Biden’s 2020 presidential campaign. That splurge made “SBF”. He is known among cryptocurrency obsessives.
According to Politico, during 2022, he donated $105,000 to conservative candidates and $35,972,000 to liberals. Additionally, he contributed to the Protect Our Future PAC, which began as the Democratic Party’s Political Action Committee. It launched with $10 million in funding, most of which came from his Bankman-Fried.
After publicly expressing a desire to donate “more than $100 million” for the upcoming presidential election, Bankman-Fried later reconsidered, describing his remarks as “a ridiculous quote.”
Democrats made no secret of their love for Bankman-Fried. In 2021, when the cryptocurrency guru testified before Congress on the future of digital assets and finance, Senator Cory Booker was compelled to say: Bankman-Fried, we have 30 seconds left to interrupt. It pisses me off that I have a much more glorious afro than before. “
Bankman-Fried lived a simple life. He could have sailed the world in his mega yacht and flew in his own 747, but he couldn’t sleep on a beanbag next to his desk and drive his Toyota Corolla. I chose. Reportedly, he used to pay himself just 1% of his profits, or about $100,000 a year.
One of the luxury apartments Bankman-Fried has granted himself is a penthouse apartment in the Bahamas that houses 10 roommates, including FTX co-founder and CTO Gary Wang and FTX’s engineering director Nishad Singh. shared with
According to CoinDesk, all the others are FTX employees that Bankman-Fried met while working at MIT or at the trading firm Jane Street, and all 10 are “romantically paired with each other.” or in pairs.” Among the group is Caroline Ellison, Bankman-Fried’s on-and-off girlfriend and CEO of Alameda Research, a quantitative cryptocurrency trading firm founded by Bankman-Fried.
Things were going well for Bankman-Fried until Nov. 2, when cryptocurrency publication CoinDesk announced some shocking news. According to Alameda’s balance sheet, the company’s assets were him $14.6 billion, of which $5.82 billion was his FTT.
No one knows who leaked the document.
“There is nothing wrong or wrong with that per se, but Bankman-Fried’s trading giant, Alameda, is primarily made up of coins invented by its sister companies, rather than stand-alone assets like fiat or other cryptocurrencies. It shows that it is built on foundations,” CoinDesk said. I have written.
Four days later, the news spurred one of Bankman-Fried’s competitors into action.
Crypto billionaire Zhao Changpeng, known as “CZ” and owner of rival crypto exchange Binance, has announced a $580 million investment in FTT tokens.
This caused other investors to panic, drop their tokens, and lead to a sale, causing FTT’s price to drop 80% in two days.
On Tuesday, Bankman-Fried announced to employees that about $6 billion in cryptocurrency had been withdrawn. As FTX was heavily leveraged in other investments, we weren’t able to successfully withdraw those.
A disaster, so to speak.
Bankman-Fried tweeted on Thursday that his mistake was “improper internal classification of bank-related accounts,” creating a large gap between leverage and liquidity.
“It teaches me a lot of things that I was not good at, both specifically and generally.”
With the FTX collapse, many investors are holding their bags.
Some celebrity representatives have claimed that the stars never invested their own money in FTX and only received a portion of the company as a reward, just losing “money” on paper. But one banker-turned-tech executive puts it differently.
Miami-Dade County, home to FTX Arena, also has an egg in its face. A spokesman for the county that negotiated the deal said it was prepared to consider “all legal remedies” if FTX fails to meet its financial obligations, and that “currently, FTX’s financial situation and the likely next We are reviewing and gathering information on steps to take,” he told Bloomberg Businessweek.
Joe Biden also lost a patron.
“He was a big wallet for Democrats, but now it’s dried up,” crypto investor Brock Pierce told the Post. “He donated his $55 million. [Democratic candidates] for midterms. “
Financial industry insiders fear that the FTX collapse could even trigger a meltdown for the entire US economy.
“I don’t know how far those tentacles are going,” one banker-turned-tech executive told The Post.
“What happened to SBF is that he set the entire crypto industry back about five or ten years overnight,” said author of “American Kingpin: The Epic Hunt for the Criminal Mastermind Behind Silk Road.” One Nick Bilton told The Post. “When cryptocurrency first came out, it was unreliable. People lost millions and billions of money to fraud. Then came exchanges like FTX and Coinbase, Cryptocurrencies had legitimacy.”
“Finance is built on trust,” added Bilton. “People walk away when they see someone like Sam set billions of dollars on fire.”