Who is Sam Bankman-Fried, the 30-year-old crypto CEO who lost his billionaire status overnight?

Once praised for his rapid and exponential rise in the world of crypto, Sam Bankman-Fried, the Chief Executive Officer (CEO) of FTX Trading Limited, has now resigned from the top position and the company has filed for bankruptcy.The fall of the 30-year-old crypto king was as rapid as his rise. According to a report by BBC, it took only a week for FTX to collapse to a level that it had to declare bankruptcy.His assets worth $16 billion have now been completely wiped out.Bankman wrote on his Twitter on Friday (11 November), “I'm really sorry, again, that we ended up here. Hopefully things can find a way to recover. I was shocked to see things unravel the way they did.”However, the company has also informed that Bankman will remain as an advisor to “assist an orderly transition.”The company announced that it was filing for Chapter 11 bankruptcy and that Bankman will be succeeded by John J Ray III.Let’s take a closer look at who Sam Bankman-Fried is and what went wrong with his company.Who is Sam Bankman-Fried?Sam was born to lawyer parents in 1992. He spent most of his life in California where he went to a local high school.He went on to study physics at the coveted Massachusetts Institute of Technology (MIT). Bankman had set his life goal by the young age of 20 when he decided to make as much money to donate to various charities. He once had described himself as a “selfless altruist”.In 2017, he bagged a job as a trader in Jane Street Capital, a position he held for nearly three and a half years before his stint with a charitable organisation called Centre for Effective Altruism.According to Moneycontrol, it was in 2017 when Sam spotted a pricing anomaly between South Korean and US bitcoin prices, which he capitalised on. Soon, he found himself sitting on a pile of money which in turn made him gain a cult status in the cryptocurrency community.He founded Alameda Research, a private trading and venture capital firm specialising in digital assets, in late 2017 with the money he had earned from the apparent anomaly.Bankman-Fried’s public recognition reached its pinnacle in October 2021 after FTX obtained the naming rights for Miami’s National Basketball Association (NBA) stadium until 2040.According to The Economist, the crypto king has also spent millions of dollars “to lobby the Congress on crypto regulation.”During his prime years, Bankman’s estimated net worth was over $26 million which earned him the status of being one of the wealthiest people in the digital assets arena.The rise and rise of FTXSam Bankman-Fried went a step ahead and founded FTX with a fellow MIT graduate and a former Google engineer Gary Wang in 2019.FTX offered to provide a platform to trade crypto tokens and derivatives. The company also boasted of a risk management system, according to a report by Indian Express.Sam, who is often referred to by his initials ‘SBF’ convinced Binance – another cryptocurrency exchange firm – to be FTX’s first-ever investor.The company was initially headquartered in China’s Hong Kong. However, in 2021, the company moved to the Bahamas, to evade stringent tax regulations.[caption id="attachment_11616411" align="alignnone" width="640"]

In July 2021, the company received $900 million in funding which increased the value of FTX to $18 billion. AFP[/caption]In July 2021, the company received $900 million in funding which increased the value of FTX to $18 billion.Following this, the exponential rise of FTX helped the company to bag a sponsorship deal with Mercedes’ Formula 1 team, in September of last year.Within just two months, FTX raised its capital value from $18 billion to a whopping $25 billion following investments from Singapore’s Temasek and Tiger Global, according to a report by Reuters.During the pandemic, when there was a sudden surge of bitcoin and other tokens among investors, SBF had risen as a celebrity in the cryptocurrency circle by building a fortune that attracted endorsements from the likes of National Football League (NFL) legend Tom Brady, NBA star Stephen Curry and American sitcom “Seinfeld” co-creator Larry David.Supermodel Gisele Bundchen reportedly bought stakes in FTX last year.What went wrong?SBF’s unprecedented rise took a turn for the worse. Media reports suggest that FTX’s downfall was a result of the mistakes made by Bankman months earlier when he volunteered to save other crypto firms amid a falling crypto market as a result of rising interest rates.According to a report by Reuters, some of these deals involved Alameda Research which led to a series of losses later. Things started to look grim when a CoinDesk report revealed this month that the majority of Alameda Research’s assets worth $14.6 billion as per the balance sheet were in fact FTX’s own FTT tokens.Coupled with inflation and recession, the company’s downfall became more apparent.

Things came to head when on 6 November, when Bankman engaged in a public feud with one of its investors Binance’s founder and CEO Changpeng Zhao (CZ). Interviews and messages revealed the bitter rivalry between the two billionaires who had started competing for market share. The situation turned ugly when both SBF and CZ accused each other of hurting one another’s businesses. On 9 November, Binance finally pulled out of its deal which threw FTX’s future into further uncertainty.Following this, Bankman-Fried was stuck without a buyer and was desperately searching for alternative investors. Following Binance’s pull-out, SBF told his FTX staff that “Binance had not previously told them of any reservations about the deal and he was exploring all options.”US authorities investigate FTXAccording to a report by The Associated Press, earlier this week FTX had agreed to sell itself to Binance. The news prompted customers to leave the exchange after they became concerned about FTX’s capital.The US Department of Justice and the Securities and Exchange Commission have currently launched an investigation to examine FTX. With the investigation, the department hopes to determine whether the company carried out any criminal activity or securities offenses.A person familiar with the developments told AP that the probe into Bankman-Fried and FTX is focussing on the possibility of whether or not the firm might have used deposits made by customers to fund bets at Alameda Research."The unwinding of FTX, as well as its shock of confidence to the system, will cause crypto prices to fall even further leading to “a new cascade of margin calls,” said analysts at JP Morgan in a note to investors.With inputs from agenciesRead all the Latest News, Trending News, Cricket News, Bollywood News,India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.