In one of the largest-ever destructions of wealth in history, Sam Bankman-Fried, co-founder of FTX, has now lost his entire $16 billion wealth, according to a report by Bloomberg.
The collapse of his cryptocurrency exchange and its trading firm, Alameda Research, has rendered the assets useless. The 30-year-value old's was $26 billion at its highest point, and it was still almost that much at the beginning of the week.
WASHINGTON, DC - DECEMBER 08: CEO of FTX Sam Bankman-Fried testifies during a hearing before the House Financial Services Committee at Rayburn House Office Building on Capitol Hill December 8, 2021 in Washington, DC. The committee held a hearing on "Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States."
FTX's Collapse
Due to a prospective trade stoppage, the Bloomberg Billionaires Index has reduced the value of FTX's US business to $1, which Bankman-Fried owns at around 70%, from $8 billion in a January funding round.
Reuters discovered that Bankman-$500 Fried's million-plus investment in Robinhood Markets Inc. was held through Alameda and might have been used as collateral for loans - that investment was also taken out of his net worth calculation.
This week's collapse of the exchange was caused by a liquidity crisis at one of its affiliates. The company's US exchange, FTX.US, advised users to close out any open positions on Thursday and warned that trading might end in a few days.
Authorities in the Bahamas, where FTX.com is headquartered, froze the assets of its linked parties and local trading business.
According to an anonymous source who spoke to Bloomberg, Bankman-Fried is being looked into by the US Securities and Exchange Commission for possible violations of securities laws.
Bankman-Fried has been working to secure new finance to save his company as FTX.com faces a cash shortfall of up to $8 billion.
According to Reuters, he is negotiating to raise $9.4 billion from investors such as Justin Sun, the cryptocurrency exchange OKX, and several funds. Users will now be able to withdraw some tokens from the unstable exchange, according to FTX, which said it had struck an arrangement with Sun's Tron.
Read also: Crypto Values Plummet After Binance Cancels Deal to Buy Rival FTX
Bankman-Fried Tweets His Side
Recent tweets from Bankman-Fried offered his perspective on the collapse of the cryptocurrency exchange.
Bankman-Fried apologized for the abrupt drop in the Bahamian cryptocurrency exchange and admitted that he messed up over a lot of issues, which he detailed in the subsequent tweets in his gloomy message thread.
The 30-year-old entrepreneur has also acknowledged breaches in communication and expressed regret for not providing frequent updates. He continues by saying that a prospective agreement with Binance prevented him from being as transparent as he would have liked.
Additionally, Bankman-Fried states that, except its US operations, its international operation has a total market value of assets and collateral that is higher than client deposits, but that this is "different from liquidity for delivery-as you can tell from the state of withdrawals," according to SBF.
The CEO believes that the inaccurate internal classification of bank-related accounts was his first error, which led to him being "substantially off" in his calculation of the user margin. He thought that the values were lower.
Related Article: CryptoWatch: Binance Transactions US Sanctions, Wuhan's NFT, and Global Banks' View on Digital Coins
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Written by Jace Dela Cruz
