Crypto's golden boy SBF's $16 billion fortune evaporated in a single week
Earlier in the spring, effective altruism believer Sam Bankman-Fried (SBF) was worth $26 billion. As crypto prices dropped, so did SBF's fortune. However, the turn of events in the past week has meant that the billionaire's riches have evaporated entirely, leaving him with nothing, just like those who invested in his company, FTX, CNN reported.
As the crypto world began to crumble over the summer, SBF was the industry's knight in shining armor. He used his riches to stabilize the industry and keep companies like BlockFi and Voyager from going under. Back in July, SBF told Reuters that his company FTX had a few billion in reserves that could be used to support the crypto industry, where he saw a meteoric rise.
SBF's fall came even faster and a week after the founder of FTX alleged that competitors were having a go at his crypto exchange, the venture formally declared bankruptcy. As the tables turned on FTX, all that was wrong with the company came out in the open.
What led to FTX's collapse?
SBF has previously spoken of how he wants to make a ton of money so that he can give it all away. A fortune of a few billion might have been enough to begin giving it away. However, the 30-year-old had other plans and began using public money to swell up his own coffers.
FTX and SBF's fortunes were tied to a digital token called FTT, and rival Binance first moved to offload FTT as it suspected that the FTX's reserves were thin. Binance was even considering bailing out FTX for a day or two. However, corporate diligence showed that FTX had transferred investor funds to its trading arm, Alameda Research.
Unable to find a savior post this reveal, FTX finally filed for bankruptcy, and SBF's personal fortune began to shrink. FTX.US is a U.S.-based crypto exchange that SBF owns, which is now considered worthless. SBF's holdings in an online brokerage firm, Robinhood, once considered to be worth $500 million, have also been reportedly scrapped since they were financed through Alameda and used as collateral for loans, the CNN report said.
Much to learn about FTX
With the company declaring bankruptcy, FTX's dream run has come to an end, but there is much to learn about what was exactly happening there under SBF's leadership. Even after he resigned, FTX reported that assets worth hundreds of millions had been siphoned off from its crypto accounts, Gizmodo reported.
What is being termed a potential hacking incident saw various tokens worth $701 million being transferred out of the exchange, Elliptic, a company that tracks cryptocurrency movements, told Gizmodo.
FTX told its investors that it was moving its funds into cold storage, a term used to denote that the assets are held offline to prevent them from being transferred. However, Elliptic could only account for $186 million worth of assets in this format, meaning that around $515 million might have been potentially stolen.
The assets that involved a wide variety of crypto tokens, such as Solana, Ethereum, Tron, and Avalanche, money were sent to three separate wallet addresses and then further routed through more exchanges to avoid seizure.
Experts wonder if a group of SBF "insiders" was involved in this asset transfer which occurred within 24 hours of the exchange declaring bankruptcy.
We might just be beginning to scratch the surface of what was happening at FTX.