Sam Bankman-Fried was formerly the king of the bitcoin industry.
Last week, all hell broke loose. According to Reuters, his cryptocurrency exchange, FTX, filed for bankruptcy on Friday.
But it gets worse.
According to unnamed sources cited by Reuters, at least $1 billion in client cash have vanished.
Reuters stated that Bankman-Fried transferred $10 billion in client assets from FTX to his trading business, Alameda Research, with up to $2 billion of those funds being gone.
According to Reuters, Bankman-Fried, who is purportedly in the Bahamas, texted Reuters that he “disagreed with the characterization” of the $10 billion transfer, stating, “We didn’t secretly transfer.”
“We had confusing internal labeling and misread it,” he texted. When asked about missing funds, he replied with question marks but did not answer, Reuters reported.
According to Fortune, the fall of Bankman-empire Fried’s is a big event for both the bitcoin industry and the Democratic Party.
OpenSecrets reports that at the age of 30, Bankman-Fried was the Democratic Party’s second-largest individual donor in the 2021–2022 election cycle, with $39.8 million in donations, of which $36,793,956 went to the Democratic Party.
In first place was the billionaire George Soros with around $128 million.
Fortune claimed that Bankman-Fried had ambitious aspirations for the future, with a “soft ceiling” of $1 billion for the 2024 presidential cycle.
According to Forbes, on Tuesday alone, his net worth went from $15.6 billion to perhaps less than $1 billion. However, as of today, all of this is all speculation, as his net worth has fallen from $15.6 billion to maybe less than $1 billion.
Sunday, the president of a competing cryptocurrency exchange said that he will sell all FTX-linked coins, signaling the beginning of the decline of Bankman-empire. Fried’s At one point, the rival exchange Binance looked willing to acquire FTX, but then backed out, sealing FTX’s downfall since it appeared financially unstable and unable to pay out the funds that clients demanded.
(The U.K. Guardian explored the “key role” Binance played in the FTX disaster in an article published Friday. The world’s largest cryptocurrency exchange, Binance has its own controversies, as Reuters reported in September.)
Fortune noted that the collapse has caused a political pickle for Democrats, “who have drawn huge donations from crypto figures while taking tentative steps toward regulating the space this year.”
As reported by the Washington Free Beacon, Bankman-Fried met with Steve Ricchetti, a prominent adviser in the Biden White House, twice this spring.
Regardless of the effect on the realm of political fundraising, the collapse of Bankman-exchange Fried’s had a severe effect on the cryptocurrency market.
“The collapse of FTX and the uncertainty it has brought to the industry has been another damaging blow,” wrote Craig Erlam, senior market analyst for foreign exchange market maker Oanda, CoinDesk, a news site that focuses on cryptocurrencies.
“How damaging it will be will depend on what further details appear in the coming days but right now, prices remain under pressure and vulnerable to further sharp declines,” he said.