NEW YORK (AP) — Sam Bankman-Fried has received many accolades for his rapid rise to superstar status as head of crypto exchange FTX. He is the savior of cryptocurrency, the latest force in Democratic politics, and could be the world’s first billionaire.
After FTX filed for bankruptcy protection on Friday, the 30-year-old Bankman-Fried’s comments weren’t so kind, leaving his investors and customers feeling cheated and many others in the crypto world to see the impact. I’m afraid Bankman-Fried himself could face civil or criminal charges.
Sean Ryan Evans, host of the cryptocurrency podcast Bankless, tweeted after filing for bankruptcy: “Sam, what have you done?”
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. but some of the action could be attributed to raw nerves from FTX.
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.
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“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, described its meeting with Bankman-Fried as likely “talking to the world’s first billionaire.” 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 business journalist Adam Fisher. Bankman-Fried’s Profile, referring to Bankman-Fried by his popular online moniker. 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.
As a cryptocurrency king, his influence was beginning to seep into politics and popular culture. FTX has purchased a prestigious sports sponsorship with Formula Racing and the naming rights to Miami’s arena. 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 has invested in his FTX.
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 more regulation of the crypto industry. Many cryptocurrency advocates oppose government surveillance. Now, FTX’s demise may have fueled claims for tighter regulation.
One of those critics was Binance founder and CEO Changpeng Zhao. The feud between the two billionaires spilled over to his Twitter, where Zhao and his Bankman-Fried collectively amassed millions of followers. Zhao helped kickstart the withdrawal that doomed FTX when Binance said he would sell his holdings of FTX’s crypto token FTT.
“(asterisk) (asterisk) t indicates … and it will be the crypto’s fault (not one person’s fault),” Zhao wrote on Twitter on Saturday.
https://www.kron4.com/news/bay-area/sam-bankman-frieds-downfall-sends-shockwaves-through-crypto/ FTX CEO Downfall Sends Shockwaves Through Crypto