- Joe Tydy
- BBC Cyber Correspondent
photo source, Getty Images
CEO Sam Bankman-Fried, founder of the global virtual currency exchange ‘FTX’, resigned on the 11th.
Founder and CEO of the global virtual currency exchange ‘FTX’, Sam Bankman-Fried, was nicknamed “King of Cryptocurrency”. But it took less than eight days for him to file for bankruptcy and for Bankman-Fried to step down as CEO.
Now, former CEO Bankman-Fried faces a federal investigation into the company’s financial management.
Over the past few years, the Internet has been flooded with videos of CEO Bankman-Fried, 30, interviewed via video from his desk in his office in the Bahamas.
However, in some videos, you can see the distracting chattering sound.
The click doesn’t stop even while I’m listening to the amazing story of how I became a billionaire in 5 years. It’s clearly the sound coming from the mouse in Bankman-Fried’s hand.
“Click, click, click.”
The mouse clicks fast and non-stop, and CEO Bankman-Fried’s eyes also roam around the computer screen.
Of course, we can’t tell for sure what Bankman-Fried is doing with his computer from the video interview, but we can guess from his previous Twitter posts.
“I am famous (notorious) for playing the game ‘League of Legends’ while on a phone call,” CEO Bankman-Fryd wrote on Twitter in February of last year.
Former CEO Bankman-Fried, who resigned this time, is actually well-known as a gamer.
CEO Bankman-Fried explained to his nearly 1 million Twitter followers that he runs two companies and trades billions of dollars a day while playing fantasy team battle games to soothe the wear and tear.
“Some people drink too much, some gamble, but I play League of Legends.”
photo source, FTX
Former CEO Bankman-Fried also liked a video game called ‘Storybook Brawl’ so much that he even brought in a game developer in March of this year.
Now that former CEO Bankman-Fried’s cryptocurrency empire has collapsed in dramatic fashion this week, another anecdote about his love of gaming has resurfaced online.
According to a blog post from Sequoia Capital, a large American venture capital firm, former CEO Bankman-Fryd was fighting fiercely in League of Legends during an important video conference with his investment team.
However, this also did not appear to be a problem. No matter what the CEO’s attitude towards the meeting, Sequoia Capital’s investment in FTX reached $210 million (about 270 billion won).
But this week, Sequoia Capital said it was deleting all posts expressing excitement about FTX, while debiting its investment in FTX as a loss.
Meanwhile, Sequoia Capital isn’t the only investor that lost a fortune when former CEO Bankman-Fried’s empire, once valued at $32 billion, collapsed.
FTX is an exchange that trades virtual currencies such as Bitcoin, and it is estimated that there are 1.2 million registered users. And now, clients, both large and retail investors, are not sure when they will get their money back on FTX.
On the other hand, just like FTX’s dizzying downfall, former CEO Bankman-Fryd is also a person who wrote a dramatic story of risk and success in itself.
Bankman-Fried studied physics and mathematics at the prestigious Massachusetts Institute of Technology (MIT). However, he says it was the lessons he learned in the student dormitory that led him to the path of riches.
In a BBC radio interview last month, Bankman-Fried recalled being fascinated by the “effective altruism” movement while in college.
Effective altruism is described as a group of “people who consider what practical actions they can take with their lives to make as much positive impact on the world as possible.”
Bankman-Fried wanted to earn a lot of money first in order to do good to society again, so he decided to get a job in the financial sector.
Bankman-Fried, who briefly learned stock trading at Jane Street, an investment company in New York, soon gets bored and decides to jump into the field of Bitcoin.
He noticed that the price of bitcoins differed slightly by exchange, and started by buying them where the price of bitcoins was low and reselling them where they could receive more.
Bankman-Fried, who tasted decent profits for a month like that, set up a cryptocurrency trading company called ‘Alameda Research’ with some college friends in 2017.
It wasn’t easy at first, says Bankman-Fried, and over the course of several months he perfected the art of how to turn money transfers advantageously across banks and borders. After about 3 months, the team hits the jackpot.
“We worked really hard,” said Bankman-Fried, who appeared on the podcast “The Jax Jones & Martin Warner Show” a year ago.
“When we encountered a new obstacle, we tried to solve it creatively, and if our system couldn’t handle it, we built a new system to overcome that obstacle,” he said.
By January 2018, Bankman-Fried’s team was making $1 million a day.
In response to a CNBC reporter’s question about how he felt at the time, Bankman-Fried replied, “It was natural for me to succeed,” both theoretically and methodologically he came up with, but “in my heart, I was surprised every day.”
Bankman-Fried, who gained more attention by establishing the coin trading platform ‘FTX’, officially became a billionaire last year. FTX has grown to become the second largest exchange in the world, with daily trading volume ranging from 10 billion to 15 billion dollars.
photo source, Twitter
Former CEO Bankman-Fried tweeted that “most companies sleep on beanbags”.
FTX, which recorded a corporate value of $32 billion earlier this year, has been active, winning the naming rights for American football fields and receiving investment from celebrities such as active American football player Tom Brady.
Meanwhile, Bankman-Fried also actively shared his daily life on Twitter. Bankman-Fried, who usually sleeps with a bean bag next to his office desk, took a picture of himself sleeping next to his employee and published it, and one morning wrote, “I can’t sleep, so I go back to the office.”
What’s more, his dream of donating huge amounts of money to charity seemed to be running smoothly, claiming in an interview with BBC Radio last month that he had “donated hundreds of millions of dollars”.
Meanwhile, Bankman-Fried didn’t just reach out to charities. Over the past six months, the ‘King of Cryptocurrency’ Bankman-Fried has earned another nickname, ‘The White Knight of Cryptocurrency’.
As the price of cryptocurrency fell, the so-called ‘Crypto Winter (Winter of the virtual currency market)’ was in full swing from this year. As a result, while the industry generally slowed down, it emerged as a ‘white knight’ by providing hundreds of millions of dollars in bailout loans to virtual currency companies in financial difficulties.
In an interview with CNBC, when asked why he was helping a cryptocurrency company in crisis, Bankman-Frid added, “In the long run, it’s not good for anyone when one side is in great pain,” adding, “and it’s not good for the customers.”
He also claimed in the interview that he had set up a $2 billion reserve fund to help troubled cryptocurrency companies.
But last week Bankman-Fried had to travel the industry to raise money to rescue his company and its clients from a liquidity crisis.
Coin industry media ‘CoinDesk’ reported that a significant portion of the assets of Bankman-Fried’s Alameda Research consisted of a token called ‘FTT’ issued by FTX, the same affiliate, raising questions about FTX’s financial health out of control. this is raised
In addition, additional accusations were made by the Wall Street Journal that FTX loaned funds deposited by customers for trading purposes to finance Alameda Research.
In the midst of such confusion, FTX’s main competitor and another cryptocurrency exchange, ‘Binance’, publicly announced that it would sell all assets linked to FTX, and the prelude to the end rose in earnest.
Binance CEO Changpeng Zhao, who has 7.5 million followers, announced on Twitter that he would sell all of his FTX holdings in Binance “given the recent revelations.”
photo source, Getty Images
Binance CEO Changpeng Zhao got into a tweet with competitor Bankman-Freed
This sparked a bank run as agitated customers withdrew billions of dollars from FTX.
Customer withdrawals were suspended, and Bankman-Fried, driven by a liquidity crisis, tried to get investments urgently. In the meantime, rumors of a takeover of Binance were raised, but Binance soon withdrew its initial offer to acquire FTX.
Binance said it had reversed its decision following reports of “mismanagement of customer funds and suspicions that it may be subject to federal investigations.”
A day later, FTX went bankrupt.
In announcing the bankruptcy filing, Bankman-Fried apologized on Twitter, saying, “I’m sorry to say again, this is how things turned out.”
“Hopefully we can find a way to recover. We hope this decision will create transparency, trust and governance.”
Bankman-Fried also wrote that he was “shocked that things had turned out this way”.
What shocked me was the cryptocurrency market as well. Bitcoin’s price plummeted to its lowest level in two years. And in a situation where FTX and its famous founder are also going down, many people are wondering who and what will go down next.