Bankman-Fried ‘nearly broke’ after $26bn wipeout
Sam Bankman-Fried, who not long ago was worth $26bn, says he now has “close to nothing”.
The fallen crypto mogul held all his assets in his nowbankrupt FTX exchange and sister trading house Alameda Research, said in a video interview with columnist Andrew Ross Sorkin at the New York Times’s DealBook Summit on Wednesday.
Bankman-Fried remains in the Bahamas and said he is left with one working credit card linked to a bank account with $100,000. He added that he is disclosing everything and has no hidden funds.
Once considered the crypto industry’s wunderkind, he is at the centre of legal and regulatory probes into whether his empire mishandled customer funds. The restructuring expert who took over FTX in bankruptcy, John Ray, has said it was the worst failure of corporate controls he had ever seen.
BUY HOMES
In a sworn declaration last month, Ray said advisers told financial institutions to freeze withdrawals and reject any instructions from BankmanFried. The documents also indicated that Alameda had lent $1bn to Bankman-Fried and that FTX Group funds were used to buy homes and other personal items for employees.
Bankman-Fried was asked about the company’s real estate purchases, including reports that his parents were provided with a home. “I don’t know the details of the house for my parents — I know it was not intended to be their long-term property, it was intended to be the company’s property,” he said.
Bankman-Fried became one of the world’s wealthiest people in just a few years after starting Alameda and then FTX, which had more than 1-million customers globally before its collapse. He won backing for his exchange from hedge funds and venture capitalists, while Alameda posted trading profits that he said he would use to sway politics and support nonprofits that align with his “effective altruism” philosophy.
Then it all came crashing down. As he told it, his swift demise began in early November when crypto news site CoinDesk reported on Alameda’s balance sheet, showing that FTT, a token issued by FTX, made up about a quarter of the trading house’s $14.6bn in assets. In just about a week, his empire spiralled into bankruptcy, wiping out his fortune.
COLLATERAL
The Bloomberg billionaires index initially dropped the value of Bankman-Fried’s stakes in FTX and Alameda to zero once he agreed to a takeover offer from Changpeng Zhao’s Binance. The index also removed his Robinhood Markets stake — one of his last remaining assets of value — from the wealth calculation after reports that it was held through Alameda and may have been used as collateral for loans.
It is all but impossible to verify whether Bankman-Fried is telling the truth, and the Bloomberg index may not have tracked all his assets. A report in November said he had more than $500m with venture capital firms including Sequoia and was an investor in media startup Semafor. But if those assets were held through Alameda, they might have been wiped out by its losses.
“This has not been a fun month for me,” Bankman-Fried said. “There’s going to be a time and a place for me to think about myself and my own future. But I don’t think this is it.”