Sam Bankman-Fried is an American entrepreneur and former cryptocurrency entrepreneur who was recently found guilty of fraud and conspiracy charges related to the collapse of the cryptocurrency exchange FTX.
He was once known as a cryptocurrency whiz kid and started his career as a trader at Jane Street Capital after studying math and physics at MIT.
In 2017, Bankman-Fried left Jane Street to start his own cryptocurrency hedge fund called Alameda Research.
He moved the headquarters of both companies from Hong Kong to the Bahamas, which has a lower corporate tax rate than the United States and a more friendly regulatory environment.
He became known for his mop of unkempt curly hair and for wearing rumpled shorts, even when entertaining dignitaries like Bill Clinton.
Bankman-Fried has pleaded not guilty to seven counts of fraud and conspiracy, but he was found guilty on all seven criminal counts against him.
Sam Bankman-Fried net worth
According to various sources, Bankman-Fried’s net worth has fluctuated significantly in recent years due to the collapse of FTX.
In 2022, his net worth was valued at a staggering $26 billion, according to a report published on Forbes.
After the collapse of FTX, his net worth plummeted 94% in a single day, dropping to $991.5 million.
As of November 2022, the Bloomberg Billionaires Index considered his net worth to have been reduced to zero.
According to Forbes, as of September 2023, Bankman-Fried currently has an estimated net worth of $4 million that is tied up in various liquid and illiquid assets.
In an interview, Bankman-Fried said that he had $100,000 in his bank account last he checked, and that basically everything he had was “tied up in the company,” which was valued at $32 billion before its collapse.
How did Sam Bankman-Fried make his fortune?
Bankman-Fried made his fortune through his involvement in the cryptocurrency industry.
After graduating from college, he founded a hedge fund called Alameda Research.
The firm traded DeFi and provided liquidity to top DeFi & CeFi exchanges, quickly becoming one of the largest liquidity providers in the DeFi space.
In 2019, Bankman-Fried co-founded FTX, a cryptocurrency exchange that became one of the leading platforms for trading digital assets.
The exchange allowed users to buy and sell digital assets such as bitcoin, and Bankman-Fried hired celebrities including NFL quarterback Tom Brady and comedian Larry David to feature in advertisements portraying FTX as safe.
Cryptocurrency valuations surged over the following two years, propelling Bankman-Fried to a net worth of $26 billion, according to Forbes magazine, before he turned 30.
Bankman-Fried also used his wealth to become one of the biggest donors to Democratic candidates and causes ahead of the 2022 U.S. midterm elections:
However, after the collapse of FTX due to allegations of fraud and misconduct, Bankman-Fried’s net worth plummeted 94% in a single day, dropping to $991.5 million.
Sam Bankman-Fried career
Bankman-Fried started his career in 2013 as an intern at Jane Street Capital, a proprietary trading firm specializing in international exchange-traded funds.
After graduating from the Massachusetts Institute of Technology (MIT) in 2014 with a degree in physics, he returned to Jane Street Capital as a full-time employee.
In 2017, Bankman-Fried left Jane Street Capital to found Alameda Research, a quantitative trading firm.
In 2019, he co-founded FTX Trading Ltd., a cryptocurrency exchange that became the second-largest of its kind.
Bankman-Fried was the CEO of FTX Trading Ltd. until 2022 when the exchange collapsed, leading to allegations of fraud and misconduct.
He has been known as a philanthropist throughout his career, donating large sums of money to various causes, including pro-animal welfare organizations and U.S. political campaigns.
What is FTX and how did it work?
FTX was a centralized cryptocurrency exchange that specialized in derivatives and leveraged products.
It was founded in 2019 by Bankman-Fried and Gary Wang, and at its peak in July 2021, it had over one million users and was the world’s third-largest cryptocurrency exchange by volume.
FTX offered a range of trading products, including derivatives, options, volatility products, and leveraged tokens.
The platform provided a comprehensive range of order types, from basic market orders to more complex trailing stop orders, and it was known for its easy-to-use desktop and mobile trading apps.
FTX allowed users to connect their wallets, place trades, exchange digital currencies, enter into derivative contracts or buy and sell NFTs.
Customers could also store cryptocurrencies on their own by creating a crypto wallet either using software or hardware, which is not part of the platform.
FTX’s goal was to build a better cryptocurrency exchange for professional traders.
Bankman-Fried saw an opportunity to create a platform that was tailored to the needs of this market segment, which was underserved by existing exchanges.
To differentiate itself from its competitors, FTX focused on building a platform with high liquidity, low fees, and advanced trading features that would appeal to professional traders.
In its early days, FTX quickly gained traction with professional traders and market makers, who appreciated the platform’s focus on their needs.
This led to rapid growth for the exchange, and it quickly became one of the leading platforms in the industry.
Despite its success, FTX was not without controversy.
The exchange faced criticism for its close relationship with the cryptocurrency Tether (USDT), which is a stablecoin pegged to the value of the US dollar.
Tether has been the subject of ongoing controversy due to questions about its solvency and the transparency of its operations.
FTX has been accused of facilitating the use of Tether as a way to manipulate the cryptocurrency market.
FTX collapsed in November 2022 over a period of 10 days.
The catalyst was a report suggesting potential leverage and solvency concerns.
Following this report, the exchange faced a liquidity crisis and tried to negotiate a bailout by rival Binance that quickly fell through.