Nov 11 (Reuters) – Sam Bankman-Fried earned a reputation as the savior of the crypto industry when he bailed out two platforms earlier this year. But when FTX, the exchange he co-founded and ran until Friday, needed a lifeline, none came.
Until this week, the 30-year-old American was seen as a darling of digital assets amassing billions in personal wealth through one of the world’s largest crypto platforms. But when traders rushed to withdraw funds from FTX, Bankman-Fried balked, telling investors he was confident the business would be bailed out, according to a source familiar with the situation. On Friday, FTX had filed for bankruptcy. He apologized, repeatedly.
“Nobody was saying nothing was going to SBF,” said Marius Ciubotariu, co-founder of Hubble Protocol, a decentralized lending platform. The company’s collapse caught markets by surprise because Bankman-Fried was seen as a business-savvy founder and deal-maker, he said.
Known in financial circles by his initials, SBF, Bankman-Fried had become a prominent and unconventional figure in the industry. He wore his trademark wild hair, T-shirts and shorts to panel appearances with statesmen such as former US President Bill Clinton and former British Prime Minister Tony Blair, as well as supermodel Gisele Bundchen. Bankman-Fried also quickly became one of the largest Democratic donors in the United States, contributing $5.2 million to President Joe Biden’s 2020 campaign.
The crypto prodigy began his career at Jane Street Capital, a choice he has said was influenced by a desire to make money to pursue his interest in effective altruism, a movement that encourages people to prioritize giving to organizations charities
He amassed a fortune, estimated at $26.5 billion by Forbes a year ago, by taking advantage of bitcoin price differences in Asia and the United States. Bankman-Fried eventually started crypto trading firm Alameda Research in 2017 and founded FTX a year later. It was valued in January at $32 billion.
The fall in FTX sent bitcoin falling to a two-year low this week amid concerns that the company’s problems are spreading to other crypto companies. Employees were blindsided by his collapse, and some sent apologetic notes to customers expressing shock at what had happened, according to a person familiar with the matter.
FTX on Friday named John J. Ray III, a restructuring expert, as CEO. He oversaw the winding down of Enron, the energy trading giant that collapsed in scandal and bankruptcy in 2001.
“A lot of people have compared it to Lehman; I would compare it to Enron,” former Treasury Secretary Larry Summers said in an interview with Bloomberg TV.
For all its recent celebrity endorsements, notoriety and big-name sponsors, Bankman-Fried wasn’t confident about FTX’s prospects in its early days.
“I thought we were going to fail,” Bankman-Fried said at a June conference weeks before FTX and Alameda pulled lifelines to two struggling crypto platforms. “I thought we would fail because no one would ever use it.”
Reporting by Hannah Lang in Washington; additional reporting by Anirban Sen in New York; Editing by Lananh Nguyen and Stephen Coates
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