The crypto star Sam Bankman-Fried faces scrutiny after the collapse of his $32 billion company.
Samuel Bankman-Fried, founder and CEO of FTX, testifies during a Senate Committee on Agriculture, Nutrition and Forestry hearing about"Examining Digital Assets: Risks, Regulation, and Innovation," on Capitol Hill in Washington, DC.of $32 billion cryptocurrency exchange FTX, like other scandal-ridden corporate failures, has yanked a once-celebrated executive into the harsh light of public scrutiny.
Days later, the company declared bankruptcy and Bankman-Fried resigned as CEO. FTX and Bankman-Fried did not immediately respond to a request for comment.Bankman-Fried was raised in Palo Alto, California, near Stanford University, where both of his parents were law professors. With this in mind, Bankman-Fried, a physics major, interned over the summer after his junior year at data-driven trading firm Jane Street, where he continued to work after graduation. After trading at the firm for three years and donating some of his money, Bankman-Fried sought out a new challenge, Sequoia Capital said.In 2018, then-25-year-old Bankman-Fried turned from quant trading on Wall Street to the relatively new world of cryptocurrency investing.
Customers flocked to the exchange for low trading fees, the variety of coins on offer, and the complex futures and options trades available. In its early years, which coincided with a crypto boom as pandemic-related stimulus drove cash into the sector, FTX added hundreds of thousands of users and some major investors.By July of that year, a $900 million funding round put the value of the company at $18 billion. A few months later, the valuation jumped to $25 billion.
At a cryptocurrency gathering in the Bahamas, in April, Bankman-Fried demonstrated his status in the industry by moderating a panel featuring the former president Bill Clinton and former British Prime Minister Tony Blair.The collapse of FTX centers in part on the cryptocurrency exchange's close relationship with Alameda Research, the crypto hedge fund also founded by Bankman-Fried.
The major exit from a crypto heavyweight triggered a wider selloff, akin to a bank run, placing immense pressure on FTX to meet the sudden demand for customer withdrawals, forcing the company to halt withdrawals and putting billions in customer funds in peril.in the aftermath of the selloff, adding that he "should have done better.
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