The Fall of Young Billionaire Sam Bankman-Fried: Bankruptcy at 30
The crypto sector braces for unforeseen consequences as Bitcoin, its official thermometer, has fallen below $16,000, its lowest value in three years.
The cryptocurrency platform FTX announced today that it has requested to file for bankruptcy in the United States and that its founder and CEO, Sam Bankman-Fried, 30, has resigned. He was one of the youngest billionaires in the world. The decision confirms the total collapse of the platform for buying and selling digital currencies, which was among the biggest market leaders.
What’s more, it was even valued at 32 billion dollars. However, in recent days it has collapsed due to the lack of liquidity, a fact that users have taken advantage of to withdraw their funds. This crisis has been compared by some experts in the field with the collapse of the investment bank Lehman Brothers in the great crisis of 2008.
Sharp drop in Sam Bankman-Fried’s fortune
In a statement, FTX assured that filing for bankruptcy is the appropriate measure to manage the company’s assets and protect the interests of its shareholders. Within hours, FTX users withdrew about 6 billion dollars. The truth is that this situation not only affects FTX clients, but also has an impact on the personal wealth of this Massachusetts Institute of Technology (MIT) graduate.
In fact, according to the Bloomberg billionaires index, he started the week with a net worth of about 15.6 billion dollars, but after the dark outlook of his companies this could be placed by around 1 billion dollars, that is, a sharp drop of 94%. This year, according to Forbes magazine, his fortune reached 24 billion dollars, nearly tripling his 2021 fortune.
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He has spent this week seeking an injection of liquid of at least 4 billion dollars in FTX to avoid bankruptcy, despite the fact that the total hole was 8 billion . According to The Wall Street Journal, Bankman-Fried explained to the funds from which he requested liquidity that he himself created the hole by withdrawing 10,000 million dollars from FTX to deposit them in Alameda Research, its sister company specialized in trading.
For this reason, FTX made loans to Alameda using money that customers had deposited in the exchange for business purposes and is now unable to pay it back. “I screwed up twice”, Bankman-Fried posted Thursday on his Twitter profile after almost 48 hours in silence, during which his clients had their money frozen.
Hopes of recovery for FTX
Without a doubt, this bankruptcy will have unpredictable consequences in the crypto sector because Bitcoin, its official thermometer, has fallen below 16,000 dollars, its lowest value in three years and almost 80% below its peak. For this reason, the US authorities are already investigating what happened in FTX.
Bankman-Fried still has hope of being able to recover, despite this severe setback from which the full extent of the financial problems that the company will face is not yet known. He claims that he is discussing options with several investors to save FTX, and that he will use “every penny” to meet his obligations to clients.
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