A week ago Sam Bankman-Fried was estimated to be worth $15.6bn. Now his empire, wealth and reputation have been eviscerated
, the firm’s enigmatic founder, has filed for bankruptcy. Mr Bankman-Fried, who was an advocate for better crypto regulation, mixed with the high and mighty in Washington and had long been perceived as one of the most trustworthy people in an untrustworthy industry, has resigned as its chief executive and is reportedly being investigated by American regulators. He is also winding down his proprietary trading firm, Alameda, and his American exchange,.
It was only on November 2nd that CoinDesk, a news website, published Alameda’s balance-sheet, revealing the incestuous nature of its relationship with. It later emerged the exchange had lent $10bn of the $16bn of crypto-assets customers had entrusted with it to Alameda, which the trading firm is alleged to have used to make risky bets. The fallout from these revelations included a nosedive in the value of.
Given Mr Bankman-Fried’s outsized influence in philanthropy and politics, there will be wider reverberations. Over the coming weeks, participants in the drama will seek to justify their actions. Mr Bankman-Fried himself intends to have a say: he has tweeted he will write a “play-by-play” account of what happened.
Leverage, risky bets, dodgy collateral—this is stuff familiar from the great financial scandals of old. John J. Ray, a lawyer brought in to clean up after Enron, an energy-trading firm, went bust in 2001, has been installed as the new boss of. Mr Bankman-Fried has hired Martin Flumenbaum, who represented Michael Milken, the “junk-bond king” imprisoned for securities fraud, as his lawyer.
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