A 30-year-old man in shorts and T-shirt, with the unruly hair typical of any so-called “crypto bro”, was the friendly image that young billionaire Sam Bankman-Fried projected to the world.
This is the story of how the high-flying crypto king — once the best-known name in the hottest asset class in the world — saw the empire he built come crashing down in the fastest destruction of wealth in modern history. What began in 2017, came to an abrupt and rather unflattering end in November 2022.
Never has the world of investment and finance witnessed the trajectory of a company founded by a young man in his twenties, whose value shot up to $32 billion at an astronomical speed in just three years and collapsed just as quickly overnight.
Never before in the cryptocurrency market since its inception and since the Bitcoin star shined brightly, has one person and his company caused so much damage and loss to millions of investors in the crypto markets around the world.
In the last two months of 2022, major global media, financial markets, and cryptocurrencies attacked the name of Sam Bankman-Fried. Until very recently, he was the most popular name in the realms of investment and the most exciting assets in the world of cryptocurrency.
Sam Bankman-Fried, aka SBF, is a young man in his thirties with a childish face and wild black hair. Often found in shorts and a cotton T-shirt, one could mistake him as a student or a good companion for fun rather than the ‘King of cryptocurrency.’
He was known for sponsoring sports clubs and animal rights organisations — a man of giving and a philanthropist.
This is the friendly image the billionaire "swindler" has promoted worldwide. But how did he build a multi-billion-dollar financial empire that soon collapsed?
It's a short story that lasted only five years and could be turned into a movie.
Pitted as the next Warren Buffet, albeit briefly, Sam Bankman-Fried was born on 6 March 1992, in Palo Alto, California. The son of two Stanford law professors, he studied physics at the prestigious Massachusetts Institute of Technology (MIT).
After graduating, he became a trader at Jane Street Capital — a global liquidity provider and trading house. Just three years after joining the firm, Bankman-Fried discovered the lucrative world of cryptocurrencies and began applying the specialist knowledge of arbitrage that he had acquired at Jane Street to this new and burgeoning market.
Early on, he bought bitcoin in the United States and sold it in Japan, profiting by up to 10%, due to the discrepancy in prices.
Alameda Research and FTX
In 2017, Bankman-Fried founded his own company, Alameda Research — a quantitative cryptocurrency trading firm that provided liquidity in cryptocurrency and the digital assets markets — serving as its chief executive until 2019.
While still running Alameda, Bankman-Fried relocated to Hong Kong, lured undoubtedly by its booming cryptocurrency market. In April 2019, he founded FTX Trading Limited, the cryptocurrency derivatives exchange firm that was to make him a famous and very rich man, albeit briefly.
The company thrived until Covid-19 swept the world in 2020, prompting Bankman-Fried to move its headquarters to the Bahamas, where he could run it with fewer restrictions during the pandemic.
Often referred to by his initials “SBF”, Bankman-Fried managed to convince his rival, Binance, to become FTX’s first inventor.
FTX went live in May 2019. It quickly grew into one of the world’s leading exchanges for buying and selling crypto derivatives. In just three years, FTX secured a $32 billion valuation and managed to woo a roster of blue-chip investors, like Paradigm, Sequoia Capital, and Singapore’s Temasek.
In early 2022, investors valued FTX and its US operations at a combined value of $40 billion — earning its place in history. By May, it had managed to acquire its sector rivals, Coinbase and OKX, reaching a spot market trading volume of $89 billion.
It was then when Bankman-Fried was dubbed the ‘king of crypto’, becoming one of the most powerful men in the industry, thanks to Alameda Research and the FTX exchange — which at one point was the world’s third-largest cryptocurrency exchange.
