The rise and fall of the former crypto darling Sam Bankman-Fried
Only Mark Zuckerberg got richer faster than the 30-year-old founder of FTX.
Only Mark Zuckerberg got richer faster than the 30-year-old founder of FTX. And no one lost their fortune as quickly. A portrait of Sam Bankman-Fried.
Ten billion vanished in 24 hours, more than 94 percent of his fortune. A record, never before did a Forbes-listed billionaire lose so much of his fortune in one day as Sam Bankman-Fried did after the fall of his exchange, FTX, on November 9, 2022. A drama that could pull the entire crypto sector down. Some are already calling it the sector's 'Lehman Brothers' moment.
The story of Sam Bankman-Fried is one of a remarkable rise and fall. With a fortune of more than $11 billion, the FTX founder becomes the second-richest crypto entrepreneur in the world, just behind Binance CEO Changpeng Zhao. Only Mark Zuckerberg got richer faster than the now-30-year-old, according to Forbes.
At the start of his journey, he didn't even own a Bitcoin. He made millions as a crypto trader by exploiting a loophole. There was a sizable price gap in Bitcoin between Japan and the U.S., the kimchi premium. He ultimately makes $25 million on a single trade. With that money and generous fund-raising, he starts FTX in 2019. In just three years it became one of the most valuable and largest U.S. crypto exchanges, with a huge cash hoard.
Vegan with the heart of a gambler who forsakes luxury
Sam Bankman-Fried was born in 1992 on Stanford's campus, the son of two law professors at the elite university. After graduating from a private high school in the Bay Area, he studied four years of physics at MIT. He spends most of his time playing video games like StarCraft and League of Legends. He loves the thrill of fast decisions under time pressure: "In chess or other games, he was always the one who wanted to play with a timer," one fellow student said in an interview. This kick is now part of his downfall.
Despite his billions, he consciously avoids luxury. He is a committed vegan, dresses simply, and drives a Toyota Corolla around the streets of the Bahamas, where he's lived since 2021. At night he sleeps in his office, on a bean bag, for less than five hours a night. That way, staff can wake him up whenever they want advice.
From hero to fallen man
Some already saw him as the J.P. Morgan of the crypto era. Others immediately: the savior of the crypto industry, a Robin Hood. According to his own statements, he started a rescue fund of more than $2 billion. In June 2022, Sam Bankman-Fried loaned the now-bankrupt crypto broker Voyager Digital over $250 million, and then bought the struggling crypto lender BlockFi at a bargain price ($25 million instead of $4 billion) which at the time had shares in the Robinhood broker.
The image of the principled crypto-hero is collapsing now. A very different character emerges: a pathological liar and gambler. Only five months earlier, he warned in a Forbes interview: "Some crypto exchanges are secretly already bankrupt." At that moment he must have known his own balance sheet was very risky, if not even illegal; and that at some point everything could collapse.
A tweet making the rounds now asks: Is Sam Bankman-Fried playing a round of League of Legends on the Steam PC platform after the crash? Just like back in college. Only this time it seems his time may finally be up.
