Who Is FTX’s Sam Bankman-Fried? Net Worth, Arrest and More

Sam Bankman-Fried began the cryptocurrency alternate FTX in 2019 at watched all of it come crashing down in 72 hours.

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Bankman-Fried was as soon as seen because the King of Crypto. He promised large returns for purchasers and buyers and even tried to assist the government impose regulations on the trade. That was till crypto big Binance expressed issues over FTX’s monetary stability and falling crypto costs sparked a financial institution run, revealing FTX and its sister firm Alameda Analysis have been suspiciously working collectively to repay money owed, based on The New York Times — and leaving an $8 billion gap in its accounts.

FTX attracted main buyers together with SoftBank and BlackRock and boasted superstar endorsements from the likes of Tom Brady and Shaquille “Shaq” O’Neal. Nonetheless, the corporate’s low-risk, high-reward enterprise mannequin appeared virtually too good to be true. And it was.

Within the wake of the FTX collapse, between $1 billion and $2 billion in shopper cash has gone unaccounted for, based on Reuters.

SBF has since been arrested and charged with a number of counts of fraud, and prosecutors say he orchestrated “one of many greatest monetary frauds in American historical past.” He may resist 115 years in prison.

Whereas the crypto scandal continues to be unfolding, here is the whole lot to learn about Bankman-Fried.

Who Is Sam Bankman-Fried?

Earlier than Sam Bankman-Fried was embroiled within the FTX scandal, he was generally known as a rising crypto wiz and an instructional standout.

Additionally recognized merely as “SBF,” Bankman-Fried was raised in California by his mother and father, Joseph Bankman and Barbara Fried, who have been each Stanford College regulation professors, based on Reuters. He excelled in arithmetic and went on to graduate from the Massachusetts Institute of Know-how (MIT) in 2014.

How Did SBF Make His Cash?

After commencement, Bankman-Fried labored for Jane Avenue Capital in New York Metropolis, the place he traded currencies, futures, and exchange-traded funds. SBF stayed with the corporate for 3 years earlier than leaving to start out his personal crypto buying and selling agency, Alameda Analysis, in 2017 when he was 25 years previous.

Associated: Who Is Caroline Ellison, Stanford Grad and Former CEO of Alameda Analysis?

Alameda was primarily based in Hong Kong and turned a revenue by profiting from the worth variations in Bitcoin world wide. The corporate would buy Bitcoin in Asia and promote it elsewhere, so as to pocket the foreign money distinction, per The New York Occasions.

Though Alameda operated very similar to a standard Wall Avenue agency, it had no regulatory oversight, which scared buyers, the outlet reported. To assist generate income for Alameda’s trades, SBF launched a cryptocurrency alternate, FTX, in 2019, which drastically benefited from the elevated demand for crypto.

The corporate was valued at $32 billion in January 2022, based on CNBC.

SBF mentioned crypto rules and testified in entrance of Congress in December 2021, detailing his then-supposed willingness to add regulations to the industry, one thing usually feared by crypto-enthusiasts. Regardless of dealing with authorized troubles for the FTX collapse, SBF stated that serving to to control the trade continues to be essential to him in an interview with The New York Times.

What Is Sam Bankman-Fried’s Web Price?

Simply days earlier than Sam Bankman-Fried’s crypto empire collapsed, he had an estimated internet value of $15.6 billion, based on Bloomberg Billionaires Index. After his fortune plummeted, he was left with $1 billion. The 94% drop in his wealth is among the many greatest one-day collapses the tracker has ever seen.

At his peak, SBF was value an estimated $26.5 billion, with most of his cash tied up in his firms.

Earlier this yr, SBF pledged to present away 99% of his fortune to charitable organizations, and his FTX Basis has donated over $190 million to a number of causes together with animal welfare and international poverty, based on Vox. SBF additionally outlined his charitable intentions in a submit to the Giving Pledge web site, which has since been removed.

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What Is FTX and What Went Fallacious?

FTX is a cryptocurrency alternate platform that labored in shut collaboration with Alameda Analysis.

Along with charging prospects to commerce on the platform, FTX created the FTT token, which was primarily purchased and bought by Alameda on the alternate, per The New York Times. Because the token’s most important market marker, it was allowed to set the worth for the token at a giant low cost, attracting folks to the platform with guarantees of a excessive return on their funding.

The enterprise mannequin attracted main buyers together with Softbank and Blackrock, along with a number of superstar entrepreneurs, together with Gwyneth Paltrow and baseball star David Ortiz.

Nevertheless, FTX’s shut workings with Alameda went beneath the radar, together with SBF’s reported romantic relationship with Caroline Ellison, who labored as Alameda’s co-CEO with Sam Trabucco.

In line with an SEC filing, Ellison stated she and others have been conscious Alameda had been utilizing FTX buyer funds.

“Throughout a gathering with Alameda workers on or about November 9, 2022, Ellison admitted that she, Bankman-Fried, Wang, and Singh have been conscious that FTX buyer funds had been utilized by Alameda,” the criticism reads.

Ellison and FTX co-founder Gary Wang later pledged responsible to a number of prices together with wire fraud, securities fraud and commodities fraud, based on AP News.

Collectively, FTX and Alameda supplied billions in funding to 246 crypto firms, however regardless of SBF’s push for extra crypto, buyers began to again out on account of fluctuating crypto costs and withdrew funds from their accounts.

As Alameda struggled to pay again its lenders, it started to make use of buyer funds deposited in FTX to pay again its buyers. FTX reportedly lent an estimated $10 billion of buyer funds to Alameda.

Then, in a last-ditch effort to avoid wasting Alameda, Binance proposed a deal to purchase the corporate, however it fell via after analyzing FTX’s books, based on The New York Times. After Binance’s CEO Changpeng Zhao introduced he would promote his FTT tokens as a result of fears in regards to the firm’s monetary stability, he sparked panic and merchants withdrew $6 billion from the platform in simply 72 hours.

The financial institution run uncovered an $8 billion gap in FTX and Alameda’s accounts.

After struggling to lift extra capital for the enterprise, FTX filed for chapter on November 11, 2022. SBF introduced he is be stepping down as CEO that very same day and would get replaced by lawyer John J. Ray III.

What Did Sam Bankman-Fried Do and Why Was He Arrested?

U.S. prosecutors have accused Sam Bankman-Fried of defrauding FTX prospects by misappropriating funds to pay money owed and bills for its sister firm Alameda Analysis. In line with prosecutors, SBF additionally supplied false and deceptive info to buyers, along with trying to cover his earnings via wire fraud, based on The New York Times.

SBF was arrested within the Bahamas at his house advanced after america filed prison prices towards him on December 12, stating they have been “more likely to request his extradition,” the federal government of the Bahamas stated in an announcement to the outlet. He’s dealing with prison prices of wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy, and cash laundering.

Moreover, the Securities and Alternate Fee has licensed prices “referring to Mr. Bankman-Fried’s violations of our securities legal guidelines.”

What Is Sam Bankman-Fried Saying within the Wake of the FTX Collapse?

After FTX imploded, Sam Bankman-Fried has been vocal about what transpired.

Simply someday earlier than the corporate filed chapter, SBF took to Twitter to situation a public apology.

Moreover, he advised that poor inside group contributed to their incapability to return funds to prospects.

Moreover, SBF stated he “didn’t ever attempt to commit fraud” on the DealBook Summit on November 30, stating he “screwed up” and failed to guard his prospects. He claims to have been truthful following the FTX fallout, stating, “I do not know of occasions after I lied.”

He went on to situation an interview with The New York Times, telling the outlet, “It could possibly be worse.” He defined that he did not understand how a lot borrowing was happening between FTX and Alameda, and the numerous threat it posed. Moreover, SBF blamed himself for not seeing hassle forward.

“Had I been a bit extra focused on what I used to be doing, I’d have been in a position to be extra thorough,” he stated. “That may have allowed me to catch what was happening on the danger facet.”

Previous to his arrest, SBF advised the NYT he was “working constructively with regulators, chapter officers, and the corporate to attempt to do what’s greatest for customers.”

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Picture credit score: (Picture by Mario Duncanson / AFP) (Picture by MARIO DUNCANSON/AFP by way of Getty Pictures)

What Is Subsequent for Sam Bankman-Fried?

Following his arrest, Bankman-Fried has been at Fox Hill jail in Nassau, Bahamas, and was denied bail. He has agreed to be extradited to the U.S.

In line with AP News, SBF was flown from the Bahamas to New York on Wednesday, and he’s anticipated to make his first U.S. courtroom look on Thursday.

A follow-up report from the outlet revealed {that a} choose has agreed to launch SBF on a $250 million bond after he agreed to waive extradition. Moreover, he can stay beneath home arrest at his mother and father’ California house as he awaits trial.

Along with the prison prices SBF is dealing with, he’s additionally coping with a category motion lawsuit claiming that the celebrities who endorsed FTX, together with Kevin O’Leary and Gisele Bundchen, have been partaking in misleading practices to “induce confidence and to drive customers to put money into what was in the end a Ponzi scheme,” based on the lawsuit.

It is attainable SBF may work out a deal that features each his prison and civil instances, Reuters reported. Moreover, prosecutors will ask for restitution for many who misplaced cash within the collapse.

Previous to Bankman-Fried’s arrest, he was imagined to testify in entrance of the Home Monetary Companies Committee concerning the FTX collapse.

“The American public deserves to listen to straight from Mr. Bankman-Fried concerning the actions that’ve harmed over a million folks,” Consultant Maxine Waters, who chairs the committee, stated in an announcement, per NYT. “The general public has been ready eagerly to get these solutions beneath oath earlier than Congress, and the timing of this arrest denies the general public this chance.”

The listening to went forward with out SBF, and FTX’s new CEO John Ray spoke in his place. He referred to as the connection between Alameda and FTX “old school embezzlement” and blamed the collapse and monetary fallout on the “absolute focus of management within the fingers of a small group of grossly inexperienced and unsophisticated people who did not implement nearly any of the programs or controls which might be vital for an organization entrusted with different folks’s cash or property.”

His testimony went on for 4 hours, stating he’s within the strategy of attending to the underside of the scandal and determining tips on how to repay lenders and prospects. Nevertheless, the unorganization at FTX has made {that a} problem.

“Even with most failed firms, now we have a good roadmap of what occurred,” Ray stated, including, “We’re coping with a literal paperless chapter.”

When requested what position SBF would play within the firm going ahead, Ray responded: “Zero.”

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