He was one of the crypto industry’s biggest stars. Now his crypto exchange, FTX, has filed for bankruptcy.
Sam Bankman-Fried — better known as SBF — is facing a reckoning over the collapse of FTX, the crypto exchange he ran. In a matter of days, his empire exploded in a rather spectacular fashion.
Bankman-Fried launched Alameda Research, a quantitative trading firm focused on digital assets, in 2017, and then FTX, an exchange, in 2019. Up until very recently, FTX had a $32 billion valuation, its smaller FTX US division was pegged at $8 billion, and Alameda had brought in a $1 billion profit in a single year. Things have since fallen apart very quickly.
Thanks to a leak about the shady accounting and financial health of Alameda Research and some savvy maneuvers from Binance, a competing exchange, investors began to pull their money out of FTX en masse. FTT, a token the company issues, plunged in value. FTX was forced to seek a bailout. Bankman-Fried obliterated the savings of countless customers and might have committed fraud in the process.
Throughout the building of FTX, Bankman-Fried was one of the brightest stars of the effective altruism (EA) movement. Through the FTX Foundation’s Future Fund, Bankman-Fried doled out millions to people and organizations with ideas about how to improve the future. (Disclosure: This August, Bankman-Fried’s philanthropic family foundation, Building a Stronger Future, awarded Vox’s Future Perfect a grant for a 2023 reporting project. That project is now on pause.) In addition to his philanthropic efforts, Bankman-Fried was the Democrats’ second-largest individual donor in 2022 after George Soros, according to data from OpenSecrets.
In the annals of crypto disasters, the tale of Bankman-Fried may become known as one of the most jaw-dropping. Bankman-Fried faces a reputational fall from grace swifter than any in recent memory. Right now, we have far more questions than answers about what went down with FTX. Will account holders get their money back? Will Bankman-Fried face criminal charges? What will happen to everyone who accepted his donations? Is it finally the beginning of the end for crypto? According to reporting from several news outlets, the DOJ and SEC are investigating FTX, and his friends and admirers in financial, philanthropic, and political circles have quickly begun distancing themselves from the man widely dubbed the king of crypto.
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