- Joe Tidy
- BBC Internet correspondent
image source,Getty Images
On November 11, FTX founder Sam Bankman-Freed resigned as president.
It took less than eight days for Sam Bankman-Fried to go from being called the “King of Cryptocurrency” to filing for bankruptcy and stepping down as president. He also now faces possible federal investigations into how he handled his business assets.
Over the past few years, the internet has been flooded with his long-form interviews, which he does via video link from his desk in the Bahamas.
In some interviews, you can hear a very disturbing “click” sound.
As the interviewer listened intently to the story of his incredible five-year journey to becoming a billionaire, the voice came from the computer mouse in the hand of the American entrepreneur, consistently and clearly.
“Click, click, click,” and just like that, there were rapid bursts of sound.
Meanwhile, Bankman-Fried’s eyes flickered across the screen.
It’s not clear from the video what exactly he was doing on the computer, but his tweets gave quite a few clues.
He tweeted in February 2021: “I famously (notoriously) enjoy playing League of Legends on the phone.”
Bankman-Fried, the former president of the cryptocurrency exchange FTX, is an avid video game fan — the exchange has been embattled recently. In a series of tweets, he explained to his nearly 1 million followers why he loves playing games. He said that playing the magic battle game is his way of taking a break from running the two companies with billions of dollars in daily transactions.
He said: “Some people drink too much, some people go to gamble, and I go to play League.”
image source,FTX
Bankman-Freed also likes to play another set of video games, the card battle game Storybook Brawl, and even bought the game developer for it.
According to a blog post by venture capital giant Sequoia Capital, Bankman-Fried was participating in a tense game at League of Legends during a high-level video conference with Sequoia’s investment team. ‘s battle.
This did not seem to disappoint the Sequoia team, which agreed to invest a total of $210 million in Bankman-Fried’s FTX.
Sequoia removed that gushing blog post last week and announced that it would transfer funds invested in FTX as losses.
They weren’t the only investors to lose out as Bankman-Fried’s $32 billion empire fell.
FTX has an estimated 1.2 million registered users who use the exchange to buy and sell thousands of cryptocurrencies like Bitcoin.
Many, from big-handed investors to general cryptocurrency fans, are wondering if it’s possible for them to get their trapped deposits back from FTX’s e-wallets.
It was a dizzying downfall, and Bankman-Fried’s rise was itself a fascinating story of risk, reward and beanbag.
Bankman-Fried studied physics and mathematics at the Massachusetts Institute of Technology (MIT), a well-known research institution in the United States.
But the bright young undergraduate said it was the classes he took in the student dorm that put him on the road to riches.
In an interview with BBC radio last month, he recalled how he had been drawn into the “effective altruism” movement. According to him, effective altruism is a group of people “trying to figure out what you can do pragmatically with your life to have a more positive impact on the world“.
According to Bankman-Fried, he decided he wanted to go into banking, find ways to make the most money, and put it into something big.
During his brief tenure at New York brokerage Jane Street, he learned to buy and sell stocks. Then he got tired of it and decided to try Bitcoin.
Noticing the price gap between bitcoins on different cryptocurrency exchanges, he started a carry trade—buying bitcoin from places that sold it cheap and reselling it to other places where it traded at a higher price.
After making a small profit for a month, he teamed up with a group of college friends to start a brokerage called Alameda Research.
How did the younger generation get hooked on cryptocurrencies and NFTs?
Bankman-Freed said that starting a business is not easy. It took several months to become familiar with the skills of interbank and cross-border working capital, but within three months, he and his team won the first prize.
A year ago, he told the Jax Jones and Martin Warner Show podcast: “We made up our minds and we broke the boat. We would work around whoever troubled us, and if we If our system can’t handle it, we will build a new one to help us get through this difficult time.”
By January 2018, his team was turning $1 million a day.
A CNBC reporter recently asked him how he felt about it.
According to his method, he rationally thinks this is “reasonable”, “but from the bottom of my heart, I feel very surprised every day.”
In 2021, Sam Bankman-Fried will officially become a billionaire thanks to his second and more lucrative business, FTX. The cryptocurrency exchange expanded to become the second largest in the world and a leader in the industry, with daily trading volume of $10 billion to $15 billion per day.
At the beginning of 2022, the market value of FTX was rated at $32 billion and became a household name. A National Basketball League (NBA) stadium has become its title stadium, and many celebrities have staged it, such as NFL player Tom Brady.
Bankman-Fried has long seemed happy to give his Twitter followers a glimpse of his way of life. He said he usually sleeps on a beanbag on a beanbag next to his desk. He said along with a photo of him sleeping next to employees and trading terminals.
image source,Twitter
“I usually sleep on a bean bag,” Bankman-Fried told Twitter followers.
In another tweet, he wrote early in the morning: “Can’t sleep, go back to the office.”
Bankman-Fried dreams of donating a large sum of money to charity, which was already in the works. In an interview with BBC radio last month, he claimed that his fortune was “currently in the hundreds of millions”.
His generosity goes beyond charity work. In the past six months, the “King of Cryptocurrency” has also been dubbed another title – “the white knight of cryptocurrencies”.
As cryptocurrency prices plummet in 2022, the so-called “crypto winter” is deep. Bankman-Fried “distributed” hundreds of millions of dollars in relief as other peers faltered.
When asked by CNBC why he was supporting the failed coin merchants, he said: “If we’re really distressed and hit, it’s not going to be good in the long run. It’s not fair to customers.”
In the same interview, he also claimed that he has set aside $2 billion in reserves to help coin dealers whose business has failed.
But two weeks ago, he was running between the same businesses trying to raise money to save his own business and customers.
FTX came after an article published on the dedicated website CoinDesk stating that Bankman-Fried’s trading brokerage firm “Alameda Research” was not based on a separate asset, but rather a fund consisting primarily of tokens invented by FTX’s sister companies. Doubts about financial soundness swirled in the air.
The Wall Street Journal then further accused “Alameda Research” of using FTX customer funds as loans to buy and sell cryptocurrencies.
The end began a few days later when Binance, FTX’s main rival, publicly sold all of its holdings of FTX-related crypto tokens.
Binance CEO Changpeng Zhao told his 7.5 million Twitter followers that his business decided to sell the assets “in light of recent disclosures.”
This triggered a run on FTX. Worried customers have withdrawn billions of dollars from the cryptocurrency exchange.
image source,Getty Images
Binance CEO Changpeng Zhao took to Twitter to openly have a succinct conversation with Bankman-Fried.
The run came to an end, and Bankman-Fried once tried to seek relief from Binance, which publicly stated that it was considering an acquisition, but later withdrew.
Binance said FTX’s “mishandling of client funds and alleged investigation by U.S. authorities” influenced its decision.
A day later, FTX declared bankruptcy.
Bankman-Fried apologized in a series of tweets, saying: “I’m so sorry again for this.”
“Hopefully we can find a way to recover, and hopefully that will bring them a little bit of transparency, trust and governance.”
He also said he was “shocked by how things unfolded”.
The world of cryptocurrencies is like that. It was before, it is now. Bitcoin prices fell to a two-year low, and many were wondering, if FTX and its talismanic leaders could fall like this, who would be next?