Sam Bankman-Fried, a cryptocurrency prodigy who is only 30 years old, has spent millions of dollars over the course of the past year attempting to change the way Washington and the world at large look at finance.
In only three years, the cryptocurrency exchange that he established, FTX, had grown to become an industry-dominating corporation that was worth 32 billion dollars as recently as January.
Emerging from obscurity, he quickly rose through the ranks to become the second-largest donor to the Democratic Party during the midterm elections. This allowed him to amass political influence rapidly.
Why is Fried in So Much Trouble?
By Friday, both the money and the influence were gone. Bankman-Fried handed in his resignation from FTX, which was followed by the company filing for bankruptcy.
On Saturday, the business disclosed that it was conducting an investigation into “fraudulent charges” involving more than $400 million and that it had put all of the funds into dropbox in preparation for the investigation.
And Bankman-Fried was forced to face queries about his contribution to the most devastating collapse that the famously unstable cryptocurrency sector has seen to this point.
The FTX thief stole $1 billion from his customers and donated $100 million to Democrats.
10% for the big guy?
— Kim Dotcom (@KimDotcom) November 13, 2022
Embracing the Crypto Brat Stereotype
Bankman-Fried stood above the image of crypto brats who waste their newfound wealth on extravagant purchases like Lamborghinis and yachts thanks to his scruffy appearance, incredibly laid-back demeanor, and the serious assertion that he is attempting to utilize his money to rescue the world.
He was compared to the Wall Street financier J.P. Morgan due to his rumored dominance over the cryptocurrency market; however, he saw himself as using his wealth to help others rather than for personal gain.
The story of how his career went off the rails is one of drive, ambition, and, ultimately, recklessness; however, the specifics of this story have not yet been disclosed to the general public.
At the young age of 28, Bankman-Fried established a platform that provided investors with simple access to the purchasing, trading, and storing of Bitcoin and other altcoins.
Although it was simple enough for American users to discover workarounds, the offshore exchange enabled buyers to place risky bets that were not allowed in the United States.
He attempted to do this by launching a massive marketing campaign, which included a flashy commercial during the Super Bowl and naming rights to the arena in which the Miami Heat play their home games. His goal was to make trading cryptocurrencies a popular pastime.
In the meantime, he was exerting his newly acquired political influence to persuade Washington to adopt a regulatory framework that held the potential to be to his benefit.
The differences were striking, and they were never simple to reconcile: Bankman-Fried was trying to evade U.S. oversight from his head offices in the Bahamas while acting as the self-appointed envoy for the cryptocurrency industry in Washington. He was lobbying for federal regulation of cryptocurrencies.
Fried Falls Down the Rabbithole
The executive admitted that his unusual position in the cryptocurrency industry was due to the intensive lobbying efforts of FTX. In an interview that took place a month ago with The Washington Post, Bankman-Fried stated that “outside of us, there weren’t many people interacting.” “I believe that indicates that we as an industry need to do a better job of doing more universally interesting work.”
At the House Democratic conference in Philadelphia in March, he clutched Maxine Waters’ arm (D-Calif.). He, with Mark Wetjen, the agency’s erstwhile interim head and now Bankman-Fried’s top Washington aide, visited Caroline Pham, a Republican member of the Commodity Futures Trading Commission, just under a week after she took office in April.
Hill employees say they often saw him about the Capitol, hopping between meetings with Wetjen and Eliora Katz, who decided to join FTX last summer from the Senate Finance Committee’s top Gop, Patrick J. Toomey (Pa.)
The downfall was swift. In 48 hours (and with four tweets from rival, Binance founder "CZ" Changpeng Zhao) Sam Bankman-Fried's empire crashed. Yesterday, FTX and Alameda Research, his two intertwined companies, filed for bankruptcy. Goodbye to FTX's CEO. And hello, hubris. pic.twitter.com/ebLoi7fA2V
— Brian Collins (@briancollins1) November 12, 2022
From Riches to Rags
His ties to Washington were seen as a breach of crypto’s fundamental objective. That allowed Changpeng Zhao, CEO of Binance, a competing crypto exchange, to defeat him quickly.
Zhao sold $580 million of FTX’s debt-supporting crypto token on Sunday. “We are not against anyone,” Zhao tweeted.
The story depicts a stunning descent. Bankman-Fried was crypto’s Warren Buffett a few months ago, but now he’s being compared to convicted scammer Elizabeth Holmes.