Sam Bankman-Fried’s crypto exchange files for bankruptcy – The Economist

by | Nov 11, 2022 | Financial

It is over. ftx, once the third-largest cryptocurrency-trading platform and crown jewel in the empire of Sam Bankman-Fried, 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, ftx.us. A week ago Mr Bankman-Fried was estimated to be worth $15.6bn, thanks to the success of these businesses. Now all are worthless. His empire, wealth and reputation have been eviscerated. It was only on November 2nd that CoinDesk, a news website, published Alameda’s balance-sheet, revealing the incestuous nature of its relationship with ftx. 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 ftt, a token issued by ftx. After this slump, Changpeng Zhao, the boss of Binance, a rival exchange, announced his firm would liquidate its holdings of ftt, precipitating a run on ftx. Binance then offered to ride to the rescue, only to back out after a look at ftx’s books.The pace of events accelerated from there. Mr Bankman-Fried called up investors who had bough …

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