- By Joe Tidy
It took Sam Bankman-Fried less than eight days to go from being dubbed the “King of Cryptocurrencies” to filing for bankruptcy and stepping down as CEO, with the risk of a federal investigation into how he handled the finances of the agency.
In recent years, the Internet has been flooded with lengthy interviews featuring him on video chat from his office in the Bahamas.
In some of them, we hear a distracting click.
As respondents listen intently to his incredible story of how he became a multi-billionaire in five years, the ringing is persistent and clearly comes from the American entrepreneur’s mouse.
“Click, click, click”, in rapid bursts.
Meanwhile, Mr. Bankman-Fried’s eyes wander around the screen.
The videos don’t clearly show what he’s doing on his computer, but his tweets give us a good clue.
“I have been known to play League of Legends on my phone calls,” he tweeted in February 2021.
Mr. Bankman-Fried, the former head of struggling cryptocurrency exchange FTX, is an avid gamer. And in a series of tweets to his million followers, he explained why. Playing the team-based fantasy battle game was his way of taking his mind off running two companies that traded billions of dollars a day.
“Some people drink too much, some gamble. I play in the league,” he said.
Since the 30-year-old’s cryptocurrency empire collapsed in spectacular fashion this week, another anecdote about his games has surfaced online.
According to a blog post from venture capital giant Sequoia Capital, Mr. Bankman-Fried played an intense League of Legend battle during a high-profile video call with his investment team.
This didn’t seem to put them off at all. The group continued to invest $210 million in Mr. Bankman-Fried’s FTX company.
This week, Sequoia Capital deleted this brilliant blog post and announced that they are now deleting their investment in FTX.
They aren’t the only investors to have lost astronomical sums since the collapse of Bankman-Fried’s $32 billion empire.
FTX had around 1.2 million registered users who used the exchange to purchase cryptocurrency tokens such as bitcoin and thousands of others.
From big time traders to cryptocurrency enthusiasts, many wonder if they will ever recover their savings trapped in FTX digital wallets.
It’s a steep fall and Mr. Bankman-Fried’s rise is also his own dramatic tale of risk, reward, and poof.
Mr. Bankman-Fried entered the Massachusetts Institute of Technology (MIT), a prestigious American research university, where he studied physics and mathematics.
But this brilliant young grad says it was the lessons he learned in college dorms that set him on the path to riches.
During a BBC radio interview last month, he recalled being drawn to the “effective altruism” movement. Effective altruism is a community of people “trying to figure out what practical things you can do in your life to have the most positive impact on the world possible,” he stressed.
So, as Mr. Bankman-Fried recalls, he decided to go into banking to earn as much money as possible and donate it to good causes.
He learned to trade stocks during a short stint at the Jane Street trading house in New York before he got bored and decided to experiment with bitcoin.
He noticed the changes in the value of bitcoin in the different cryptocurrency markets and started arbitrage, i.e. buying bitcoins from places where they were cheap and reselling them in other places where they were more expensive.
After making modest profits for a month, he teamed up with college friends and started a trading company called Alameda Research.
Mr. Bankman-Fried says it wasn’t easy and it took months to perfect the techniques for getting money in and out of banks and across borders. But after about three months, he and his little team hit the jackpot.
“We were super stubborn,” she told the Jax Jones and the Martin Warner Show podcast a year ago. “We kept going. If someone threw us another barrage, we got creative, and if our system couldn’t handle it, we just built a new system to get us through that circle.”
As of January 2018, his team was making $1 million (FCFA 637,817,590) every day.
A CNBC business reporter recently asked her how she was feeling.
Intellectually and according to his methodology, he replied that “it made perfect sense”. “But viscerally, she surprised me every day,” she says.
Sam Bankman-Fried officially became a billionaire in 2021 thanks to his sideline and more high-profile business: FTX. The cryptocurrency exchange has become the second largest in the world and a titan in the industry, with $10-15 billion (over 6-9 trillion FCFA) traded every day.
As of early 2022, FTX was valued at $32 billion (FCFA 20 trillion 400 billion 72 million) and was known to all, with an NBA stadium named after him and celebrity endorsers like the NFL’s Tom Brady.
Meanwhile, Mr. Bankman-Fried apparently enjoyed giving his Twitter followers a glimpse into his lifestyle. He mostly sleeps on an ottoman next to his desk, she said, holding up a photo of him lounging next to his employees in front of their trading terminals.
In another, he posted in the wee hours of the morning. “Unable to sleep. Go back to office,” she wrote.
Mr. Bankman-Fried’s dream of donating large sums of money to charity was also on its way. In an interview with the BBC last month, he said he had given “a few hundred million so far”.
And his generosity doesn’t just extend to charity. Over the past six months, the “king of cryptocurrencies” has been given another nickname – “the white knight of cryptocurrencies”.
With the fall in the price of cryptocurrencies in 2022, the so-called “Crypto Winter” is in full swing. While other companies in the industry struggle, Mr. Bankman-Fried is doling out hundreds of millions of dollars to bail them out.
When asked why he was trying to shore up struggling crypto businesses, he told CNBC, “It’s not going to be good in the long run if we have real pain points and hit points. And that’s not fair to the customers.”
He also said, in the same interview, that he has $2 billion in reserve that he could use to help struggling cryptocurrencies.
But last week, he himself was circling the same industry trying to raise money to save his business and his clients.
Questions about FTX’s true financial stability began to swirl after a post on CoinDesk suggested that much of Mr Bankman-Fried’s trading giant, Alameda Research, rests on a foundation made up largely of people. not an independent good.
The Wall Street Journal also accused Alameda Research of using FTX client deposits as trade loans.
The beginning of the end came, however, when FTX’s main competitor, Binance, publicly sold all of its FTX-linked cryptocurrency tokens a few days later.
Binance CEO Changpeng Zhao tells his 7.5 million followers that his company reportedly sold its holdings “in light of the recent revelations.”
This sparked a run on FTX, with panicked customers withdrawing billions of dollars from the cryptocurrency exchange.
Withdrawals were halted and Mr. Bankman-Fried tried to get a bailout from Binance at one point, publicly considering a takeover before backing out.
Binance said reports of “mishandling of client funds and alleged investigations by US agencies” influenced its decision.
A day later, FTX was declared bankrupt.
Mr Bankman-Fried apologized in a series of tweets, saying: “I’m so sorry, once again, it’s come to this.
“I hope things can find a way to bounce back. I hope it can bring transparency, trust and governance to them.”
He also stated that he “was shocked to see things unravel the way they’ve been”.
The world of cryptocurrencies has been and still is. The price of bitcoin fell to its lowest level in two years and many are wondering – if FTX can fall along with its talismanic leader – what could fall next?