Jannah Theme License is not validated, Go to the theme options page to validate the license, You need a single license for each domain name.

Defeat of FTX Founder Sam Bankman-Fried Sends Shockwaves to Crypto World – Orange County Register

Ken Sweet | | AP Business Writer

NEW YORK — Sam Bankman-Fried has received many accolades for his rapid rise to superstar status as head of cryptocurrency exchange FTX. He is the savior of cryptocurrency, the latest force in Democratic politics, and a possible world’s first billionaire.

After FTX filed for bankruptcy protection on Friday, comments about the 30-year-old Bankman-Fried ranged from embarrassment to hostility, leaving his investors and customers feeling duped and many others in the crypto world to criticize that. Fears repercussions. Bankman-Fried himself could face civil or criminal charges.

“I’ve known him for years, but what happened recently is just shocking,” said Jeremy Allaire, co-founder and CEO of cryptocurrency company Circle.

Under Bankman-Fried, FTX quickly grew to become the third largest exchange by trading volume. The stunning collapse of this nascent empire sent tsunami waves through the cryptocurrency industry, which has seen its fair share of volatility and turmoil this year, including sharp drops in the prices of Bitcoin and other digital assets. For some, the event is reminiscent of the Wall Street corporate domino failure during the 2008 financial crisis. Especially now that a company that was supposed to be healthy like FTX is failing.

A venture capital fund has written down its investment in FTX worth more than $200 million. Cryptocurrency lender BlockFi suspended customer withdrawals on Friday after FTX sought bankruptcy protection. Singapore-based exchange Crypto.com saw an increase in withdrawals this weekend for internal reasons, but some of the action could be attributed to raw nerves from FTX.

Ryan Sean Evans, host of the cryptocurrency podcast Bankless, tweeted, “Sam, what have you done?” after filing for bankruptcy.

Sam Bankman-Fried at the 1st Annual Moonlight Gala Benefit Care – Special Needs Hosted by Michael Caia, Roy Nathum and Megamoon Museum at Casa Cipriani on June 23, 2022 in New York City with children – speaking on stage at. (Photo by Craig Barritt/Getty Images)

Bankman-Fried and his company are under investigation by the Department of Justice and the Securities and Exchange Commission. The investigation focused on the possibility that the company violated U.S. securities laws by using customer deposits to fund betting at his Alameda Research, a Bankman-Fried hedge fund. There is a nature.

“This is a direct result of rogue actors breaking all the cardinal rules of financial liability,” said Patrick Hillman, chief strategy officer at FTX’s biggest competitor Binance. It seemed ready to step in to bail out FTX, but backed out after reviewing FTX’s book.

The ultimate impact of FTX bankruptcy is uncertain, but its failure could destroy billions of dollars of wealth and fuel even more crypto skepticism at a time when the industry could have a vote of confidence. there is.

Swan Bitcoin CEO Cory Klippsten has voiced concerns about FTX’s business model for months, but said that “it’s the retail investors who have been hit the hardest, who continue to use bitcoin as a fraud”. I care because too many people incorrectly associate it with the ‘virtual currency’ space. While Mr. Clipsten is publicly enthusiastic about Bitcoin, he has long been skeptical about the rest of the crypto world.

Bankman-Fried founded FTX in 2019 and has grown rapidly. His most recent valuation was $32 billion. Bankman-Fried, the son of a Stanford professor and known for playing the video game League of Legends during conferences, has attracted investment from Silicon His Valley’s top executives.

Sequoia Capital, which has invested in Apple, Cisco, Google, Airbnb and YouTube for decades, says it’s likely he’s “talking to the world’s first billionaire” on meeting with Bankman-Fried Did. Several of Sequoia’s partners became enthusiastic about Bankman-Fried after his Zoom meeting in 2021. After a few more meetings, Sequoia decided to invest in the company.

“I don’t know how I know, I just know. SBF is a winner,” wrote Adam Fisher, a business journalist who profiled Bankman-Fried for the company. The article, published in late September, has been removed from his website on Sequoia.

Sequoia has written down its $213 million investment to zero. A pension fund in Ontario, Canada, also impaired its investments to nil.

In a brief statement, the Ontario Teachers’ Pension Fund said:

But until last week, Bankman-Fried was considered the white knight of the industry. Whenever there was a crisis in the cryptocurrency industry, Bankman-Fried was likely to jump in with a rescue plan. When his online trading platform Robinhood was in financial trouble earlier this year after falling stock and cryptocurrency prices collateral damage, Bankman-Fried jumped to buy shares in the company as a sign of support. I was.

When Bankman-Fried bought the assets of bankrupt cryptocurrency firm Voyager Digital for $1.4 billion this summer, Voyager account holders felt a sense of relief as their assets had been frozen since their own bankruptcy. . That salvation is now in question.

FTX’s bankruptcy began after cryptocurrency news outlet CoinDesk published an article based on a leaked balance sheet from Alameda Research. In this article, we found that the relationship between FTX and Alameda Research is deeper and more intertwined than previously known. This included FTX lending a large amount of its own token FTT to Alameda to pile up cash. It caused massive withdrawals from FTX, and the crypto company experienced a very old financial problem: bank runs.

“FTX created a worthless token out of thin air and used it to make its balance sheet look more robust than it actually was,” said Klippsten.

As the king of cryptocurrencies, Bankman-Fried’s influence was beginning to seep into political and popular culture. FTX bought a prominent sports sponsorship with Formula One Racing, bought the naming rights to Miami’s arena, and ran a Super Bowl ad featuring Seinfeld creator Larry David. did. He pledged to donate his $1 billion to Democrats this election cycle. His actual donations amounted to tens of millions of dollars, and prominent politicians like Bill Clinton were invited to speak at his FTX conferences. Football star Tom Brady invested in FTX, as did his supermodel soon-to-be ex-wife Gisele Bündchen.

Bankman-Fried was also beginning to wield his financial weight in the media. He was an early investor in his news startup Semafor, run by former BuzzFeed editor-in-chief and New York Times columnist Ben Smith. He also donated his $5 million to investigative news his outlet ProPublica.

Bankman-Fried was the subject of some criticism before FTX collapsed. While he primarily operated his FTX out of US jurisdiction from its headquarters in the Bahamas, Bankman-Fried was increasingly vocal about the need for greater regulation of the cryptocurrency industry. Many cryptocurrency advocates oppose government surveillance. Now, FTX’s demise may have fueled claims for tighter regulation.

https://www.ocregister.com/2022/11/14/sam-bankman-frieds-downfall-sends-shockwaves-through-crypto-4/ Defeat of FTX Founder Sam Bankman-Fried Sends Shockwaves to Crypto World – Orange County Register

Related Articles

Back to top button