One week ago, crypto billionaire Sam Bankman-Fried was one of the Democratic Party’s biggest donors. Now, the 30-year-old’s firm is bankrupt, his fortune has evaporated, and he’s facing DOJ and SEC investigations.
Summary
One week ago, crypto billionaire Sam Bankman-Fried was one of the Democratic Party’s biggest donors. Now, the 30-year-old’s firm is bankrupt, his fortune has evaporated, and he’s facing DOJ and SEC investigations.
- Bankman-Fried was the chief executive of cryptocurrency exchange FTX until Friday when the company he founded announced it was filing for bankruptcy.
- FTX sought bankruptcy protections after experiencing “the crypto equivalent of a bank run.” The unraveling of FTX has caused numerous companies to write down their investments in the exchange and led politicians and regulators to escalate calls for stronger regulation of crypto.
- FTX’s $32 billion valuation evaporated after “liquidity dried up, customers demanded withdrawals and rival exchange Binance ripped up its nonbinding agreement to buy the company.”
- FTX reportedly lent its customer’s money to Alameda Research, an affiliated firm whose troubles accelerated FTX’s collapse. After Friday’s bankruptcy filing, more than $400 million worth of crypto funds appeared to be missing after a potential hack.
- Sam Bankman-Fried was seen as a wunderkind in the crypto industry and rapidly amassed a fortune estimated as high as $26.5 billion at its peak. Former Treasury Secretary Larry Summers compared the rapid collapse of Bankman-Fried’s company to Enron’s collapse in the early 2000s.
- The New York Times argued those who called Sam Bankman-Fried “a modern-day J.P. Morgan” were still right even after the collapse of his fortune. The careers of both Bankman-Fried and Morgan “demonstrate a need for central banks.”
- The Washington Post covered Bankman-Fried’s efforts to buy influence in Washington before his crypto empire collapsed. Bankman-Fried appeared out of nowhere to become the second-biggest Democratic donor after only George Soros.
- The Guardian looked back at FTX’s rise from obscurity to becoming the second-largest cryptocurrency exchange over three short years before its spectacular collapse this week. The erasure of Bankman-Fried’s fortune represented “the biggest one-day collapse of personal wealth ever.”
- The Wall Street Journal chronicled how Bankman-Fried “went from crypto golden boy to villain.” One of Bankman-Fried’s fatal mistakes was the decision to advocate for crypto regulation, a move that antagonized the other major players in the crypto world.
- Elon Musk said Bankman-Fried “set off my bs detector” after offering $3 billion to help Musk fund the Twitter deal, according to The New York Post.
- The Washington Free Beacon reported Bankman-Fried had high-level meetings at the White House less than six months ago as Congress debated how to regulate the crypto industry. Shortly after the meeting, Bankman-Fried pledged to donate up to $1 billion to Democratic candidates.
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© Dominic Moore, 2022
