Sam Bankman-Fried: This crypto entrepreneur saw his £21bn empire crumble in just three days – what happened at FTX?
Sam Bankman-Fried looked unstoppable.
The 30-year-old had built a £21bn business empire and was the CEO of FTX, the world’s second-largest cryptocurrency exchange.
More than one million customers worldwide were using his platform to buy assets like Bitcoin – enticed by star-studded adverts that made everything look simple and safe.
Naomi Osaka appeared in an ad for FTX
Bankman-Fried – known as SBF for short – had become one of the biggest names in the crypto industry too, with his company swooping in to save smaller firms after they were tipped into bankruptcy.
But in the space of just three days, a series of bombshell allegations led to the spectacular collapse of FTX and a bankruptcy of its own.
Bankman-Fried’s personal wealth dropped by a staggering 94% in 24 hours – the biggest one-day fall ever suffered by a billionaire, according to Bloomberg.
Hundreds of thousands are locked out of their life savings – an estimated 80,000 of them in the UK.
Vast sums of money have gone missing from the exchange, amid allegations that customer funds were mismanaged.
No longer a billionaire, Bankman-Fried says his net worth has dwindled to $100,000 (£80,000) following FTX’s demise – and he admitted it has been a “bad month”.
But it could soon get a lot worse for Bankman-Fried. Criminal investigations have now been launched into the company’s collapse, with aggrieved investors filing a flurry of lawsuits.
So what next for the deposed “Crypto King”, why did his digital empire rise and fall so quickly, and where does it leave this already embattled industry?
An ‘altruistic’ entrepreneur
Californian-born, a poster boy for “effective altruism” (getting rich in order to give money to good causes), a teetotaller and a vegan, Bankman-Fried is in many ways a far cry from the Machiavellian emperors of time gone by.
Still, SBF managed to craft an empire that would even make Julius Caesar green-eyed.
Bankman-Fried’s story – which is by no means a rags-to-riches one – begins in the wealthy San Francisco Bay area, where he attended a $56,000-a-year school.
After graduating from the Massachusetts Institute of Technology, SBF moved on to Wall Street – and later set up his own trading business called Alameda Research.
His co-founder Tara Mac Aulay left the business in 2018 in part because of “concerns over risk management and business ethics”.
After attending a cryptocurrency event, Bankman-Fried left the US and moved to Hong Kong, where he founded FTX.
The FTX boom
FTX was set up to allow people to buy cryptocurrencies using their pounds and dollars. It was praised for its easy-to-use interface – and made money by charging small fees for each transaction.
By July 2021, FTX had more than one million users and was the third-largest cryptocurrency exchange by volume – winning investments from major firms including SoftBank and Sequoia Capital.
In September of that year, Bankman-Fried moved his business to the tax haven of The Bahamas – in part, he claimed, because of a crackdown on crypto by China.
Once settled in the Caribbean, Bankman-Fried – an avid gamer who was once accused of playing League of Legends during a business meeting – invested in a multimillion-dollar waterfront penthouse.
The luxury property, overlooking an area used for filming the scene where Daniel Craig famously emerged from the water in Casino Royale, was also used as a home office for Bankman-Fried and up to nine of his FTX devotees.
Pic: AP
Under SBF’s leadership, FTX marketed itself aggressively. It paid a reported $135m (£110m) for the naming rights to an arena used by the Miami Heat basketball team.
Tennis star Naomi Osaka and NFL legend Tom Brady entered into high-profile partnerships with the exchange – appearing in TV adverts and snapping up equity stakes in the business.
And during the Super Bowl earlier this year, FTX spent millions on a 60-second TV spot featuring Curb Your Enthusiasm star Larry David – a commercial that hasn’t aged well.
The advert showed David travelling through the ages and dismissing inventions including the wheel, the fork and the toilet – zooming to the present day, where he’s told about FTX being a “safe and easy way to get into crypto”.
“Ehhhhh, I don’t think so,” the comedian says in the advert. “And I’m never wrong about this stuff. Never.”
The FTX bust
In April this year, Bankman-Fried cemented his status – appearing on stage at an event with former US president Bill Clinton and ex-UK prime minister Tony Blair.
SBF also backed Joe Biden’s presidential campaign against Donald Trump to the tune of more than $5m (£4.1m) – making him the politician’s second-biggest financial backer.
But last month, reports began to suggest trouble was afoot at FTX because of its close ties to Bankman-Fried’s first business, Alameda Research.
FTX had created its own token called FTT, which was designed to offer discounts and incentives to the exchange’s customers. The total value of all the FTT tokens in circulation stood at £2.65bn – making it one of the biggest cryptocurrencies in the world.
A leaked document obtained by the crypto publication CoinDesk revealed that Alameda Research had a significant amount of FTT on its balance sheet – raising serious questions about the health of this trading firm.
That spooked Changpeng Zhao – an early investor in FTX who runs Binance, the world’s biggest exchange.
Changpeng Zhao. Pic: AP
In a dramatic move, Zhao, who had been feuding with Bankman-Fried over the future of crypto regulation, announced Binance would sell off the FTT tokens on its books – a haul worth $529m (£430m).
The announcement sparked a huge decline in the value of FTT, which has lost 95% of its value since the crisis began. Meanwhile, investors rushed to FTX to withdraw their crypto, fearing its collapse.
It is estimated that about $6bn (£5.2bn) worth of withdrawal requests were made in three days, pushing FTX into a financial crisis.
Binance said it would consider acquiring FTX – but one executive said it took just two hours of due diligence to conclude that the company was beyond saving.
That same day, FTX filed for bankruptcy in the US state of Delaware – with liabilities of at least $10bn (£8.2bn).
Users are now unable to withdraw their savings from the exchange, and it could be years before they see any of their money again.
Things then went from bad to worse. Hours after the bankruptcy, worried customers were dealt another blow after FTX was hacked – with officials estimating that $600m (£490m) was siphoned from the exchange.
Bankman-Fried also caused anger when he tweeted “WHAT HAPPENED”, one letter at a time, in a thread over several days – leading to criticism that he was tone deaf while users were desperate for updates about what was going on.
Allegations of shady business practices have since emerged – with Reuters reporting that FTX used customer funds to cover losses at its sister company Alameda Research, with up to £8bn being moved in secret. Bankman-Fried has said he “wasn’t running” Alameda’s operations and “didn’t know exactly what was going on”.
Elsewhere, it’s been claimed that Bankman-Fried had established a “backdoor” in FTX’s bookkeeping system that allowed money to be moved out of the business without other executives being alerted. The entrepreneur has denied that this was the case.
The Financial Times also reported that as much as $8bn (£6.5bn) in customer funds has vanished from FTX – and now, the exchange’s new management has been left picking up the pieces.
FTX’s new CEO is John Ray, who made his name after leading the energy firm Enron through bankruptcy proceedings in the early 2000s. That major company had collapsed amid revelations of widespread accounting fraud and corruption.
Outlining the severity of the crypto exchange’s condition, Mr Ray wrote in a bankruptcy filing: “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.
“From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.”
A bankruptcy lawyer for FTX’s new management later said Bankman-Fried had run the company as his “personal fiefdom” – and the business has suffered “one of the most abrupt and difficult collapses in the history of corporate America”.
Bankman-Fried has repeatedly apologised – saying he “f***** up” with how he handled the business – and has given a number of high-profile interviews despite being advised not to do so by lawyers.
He has also expressed fears that some customers who had crypto locked up in FTX may only receive 20% to 25% of their savings back.
Read more: Founder of bankrupt crypto firm breaks his silence
Pic: ABC News via AP
On Wednesday, he spoke at The New York Times’ DealBook summit for the first time since the dramatic collapse of the business.
He said: “I didn’t ever try to commit fraud on anyone. I was excited about the prospects of FTX a month ago. I saw it as a thriving, growing business. I was shocked by what happened this month.”
SBF was also asked about claims that he and the co-workers in his penthouse were a polyamorous group who drifted in and out of relationships with one another and held drug-fuelled parties.
He told The New York Times: “When we had parties, we played board games and 20% of people would have three-quarters of beer each or something like that. And the rest of us would not drink anything. I didn’t see any illegal drug use around me – you know, at the office or at these parties.”
And speaking to Good Morning America, SBF added: “I lived with a bunch of monogamous couples when I was here, some of whom got married over the course of their time here. I don’t know of any polyamorous relationships within FTX.”
Read more: Major crypto exchange FTX begins bankruptcy proceedings in US
The value of FTX’s FTT token has collapsed over the past month. Pic: CoinMarketCap
What about the future?
Everyday investors and some top US firms have lost out in the FTX crash.
A crypto lending company called BlockFi has now been tipped into bankruptcy as a direct result of this exchange’s demise, and more may follow.
Meanwhile, the future of other businesses that FTX had acquired is uncertain.
The shockwaves have been largely contained in the crypto sector and haven’t spilled over into traditional markets.
Nonetheless, experts in the field say there will be real-world ramifications going forward.
Eddie Donmez, finance influencer and global market analyst at Finimize, said crypto businesses are likely to face more regulation in the future.
He told Sky News: “In the near term, the contagion has been within the crypto market and while the near term has been very bad, terrible, for cryptocurrency what I do think is that it could be an acid test for regulation.
“While there are always bad actors involved in any industry where money is involved, this could be a good thing in the long term for crypto.”
Mr Donmez also said he believed that the whole FTX episode is something that should make people sit up and listen.
He added: “This story is of interest to the public because there are some major players who have been fooled by a kid playing computer games in investment meetings.
“It shows everyone can get it wrong from time to time.”
Katharine Wooller, from crypto insurance firm Coincover, added: “I think this will bring regulation. Crypto purists will say no because it is against what they believe is at the heart of crypto, but there needs to be more regulation, not less.”
The collapse of FTX is another hammer blow to the credibility of cryptocurrencies – with Bitcoin’s price falling by 75% since November 2021.
But Bitcoin enthusiasts say this company’s demise shows why it is important for investors to store crypto on their own devices, rather than entrust it to an exchange.
There’s little sign that conditions will improve in this infamously volatile sector any time soon – and if the world’s second-largest exchange can go bankrupt, no crypto company is safe.
World
Andrew Tate arrives in US after travel ban was lifted – as Trump says he knows ‘nothing about that’
Andrew Tate and his brother Tristan have landed in Florida in the US after a travel ban in Romania was lifted – as Donald Trump insisted he knows “nothing about that”.
The Tates landed in Fort Lauderdale in a private plane at around 11:30am local time, their representative Mateea Petrescu added.
Speaking around an hour later, Andrew Tate told reporters: “We’ve yet to be convicted of any crimes in our lives ever. We have no criminal record anywhere on the planet ever.
“Our case was dismissed on 19 December in Romania under the Biden administration, and our prosecutor recently decided, because we have no active indictment in court, to let us go and return.
“This is a Democratic society, we’re supposed to be innocent until proven guilty, as my brother and I are.”
The brothers, who champion US President Trump, are facing charges in Romania of human trafficking, sexual misconduct and money laundering, as well as starting an organised crime group.
The self-styled misogynists are dual UK and US nationals whose controversial views are shared widely on social media platforms such as TikTok and X.
Their arrival in Fort Lauderdale comes after the Financial Times reported last week that the Trump administration had lobbied their Romanian counterparts to ease restrictions on the brothers while they face charges.
Romanian foreign minister Emil Hurezeanu said the Tates were mentioned during his brief hallway meeting with Mr Trump’s special envoy Richard Grenell at the Munich Security Conference earlier this month.
Mr Trump was asked about the arrival of the Tates in the US while meeting with UK Prime Minister Sir Keir Starmer at the White House this evening.
Asked by a reporter if his administration pressured the Romanian government to let the Tates travel, the US president told reporters: “I know nothing about that. You’re saying (Andrew Tate) is on a plane right now?
“I just know nothing about it, we’ll check it out, we’ll let you know.”
Romanian prosecutors later said they had approved a request from Andrew Tate, 38, to travel outside of the country, pending the outcome of a criminal investigation.
The pair had been released from house arrest, but were not allowed to leave the country and were required to check in with the police regularly.
Read more:
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Who is the self-styled ‘king of toxic masculinity?
Andrew Tate and his brother Tristan outside a Bucharest court last month. File pic: Inquam Photos/Octav Ganea via Reuters
“The request to change the obligation of not leaving Romania was approved,” prosecutors said in a statement on Thursday.
“All the other obligations have been maintained, including the requirement to check in with judicial authorities every time they are called.”
A spokeswoman for the Tates told Sky News the Romanian courts had decided they will return to the brothers all of their assets.
This includes restoring their ownership of all previously frozen bank accounts, five properties, six cars including two Audis and a Ferrari, and company shares. Some assets will remain under precautionary seizure, according to the court ruling.
The brothers are fighting a series of legal battles not just in Romania, but also in the UK and the US.
They have consistently denied any wrongdoing in connection with all the legal action taking place.
The Tates grew up in Luton and have millions of social media followers. Andrew Tate also appeared in the UK version of Big Brother in 2016.
The pair are often criticised for their misogynistic views online – particularly as they have a predominately young, male audience.
A number of banned Twitter accounts have been reinstated by Elon Musk. Tate was among those brought back on 18 November 2022 after Musk took over and rebranded it X.
A British court ruled in March that the brothers are also under a European arrest warrant and will be extradited to the UK – where allegations of rape and human trafficking are being investigated by Bedfordshire Police – after Romanian trial proceedings finish for a separate investigation.
A recent lawsuit filed in Florida accuses both Tate brothers of conspiring to coerce a woman into sex work, luring her to Romania and defaming her after her testimony to Romanian authorities. The Tate brothers had previously sued her for defamation in 2023.
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Four British women who allege they were raped and coercively controlled by Andrew Tate said they have been “retraumatised” by today’s events.
“It is clear that there is now a major risk that the criminal prosecution for his alleged crimes in Romania will not proceed, and he may use this development as an opportunity to harass further and intimidate witnesses and his accusers as well as continue to spread a violent, misogynistic doctrine around the world,” the alleged victims said in a joint statement.
Tate is facing civil action brought by the women at the High Court. He denies the allegations and has threatened to pursue the women for defamation.
Matthew Jury, their solicitor at McCue Jury & Partners, said: “The news that pressure by the Trump administration has led to Andrew Tate, and his brother Tristan, being allowed to leave Romania by its authorities is equal parts disgusting and dismaying.”
He added: “The UK government knew this might happen more than a week ago. The fact that nothing seems to have been done to prevent it is concerning. One can only hope action will now be taken. Given that Prime Minister Starmer is in the US today to meet with President Trump, perhaps his team may take the opportunity to raise this issue.”
The Israel Defence Forces has admitted the attacks by Hamas on October 7 2023 were “a complete failure” of Israeli security and the result of many years of planning and deception by the Gaza-based militant group.
Announcing some of the findings from a major internal investigation, the Israeli military said “the IDF failed in its mission to protect people” and it was “one of the greatest failures” in the military’s history.
Nobody in the Israeli security establishment knew of, or predicted, the attacks and the force stationed on the border was the minimum required for everyday threats.
The primary focus at the time was on the threat from Iran and Hezbollah. The inquiry concluded that those actors were aware of Hamas’s plans but probably didn’t know the exact timing of the attacks.
Gaza was seen as a secondary threat and while Hamas was considered an illegitimate governing body of Gaza, there was no effort to develop an alternative.
The inquiry, which is the result of tens of thousands of hours of work by the IDF Southern Command, found as many as 5,600 terrorists broke into Israel in three waves.
On October 7 2023, 4,694 mortars and rockets were fired from Gaza into Israel, and 1,320 people were killed and 251 taken hostage.
As the IDF battled to regain control of southern Israel the same day, some of its commanders were forced to use google maps and mobile phones to communicate and co-ordinate.
Israel’s Iron Dome system intercepting rockets launched from the Gaza Strip on October 7. Pic: Reuters
The majority of killings and kidnappings occurred during the first two waves of attacks, between 6.29am and 9am on that Saturday morning.
Many Palestinians who entered Gaza in the third wave, during the afternoon, were from other terror organisations or “a mob taking advantage” rather than Hamas fighters trained for the attack.
In the chaos, the Israeli air force struggled to distinguish between Hamas fighters and Israeli civilians. The IDF accepts there were some deaths caused by friendly fire but haven’t elaborated how or where.
By 5pm, there were still hundreds of Hamas fighters spread out along the so-called Gaza envelope of Israeli communities, many in open areas.
It’s thought they planned to reach deeper into Israel, including Ashkelon and key air bases.
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What happened on 7 October 2023
Intelligence assessments at the time believed that Hamas didn’t want a full-scale war and lacked the capability to launch one. IDF officials believed there would be early warnings if an attack was imminent, and the strategy was to “maintain the threat” rather than neutralise it.
Based on that, officials said soldiers “were addicted to the precise intelligence information” and failed to challenge the assumptions internally.
Although there were some unusual indications an attack was under way overnight, such as the activation of Israeli SIM cards inside Gaza, duty officers didn’t think it was time-critical and further investigation was needed.
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Israeli soldiers working to secure residential areas after Hamas’s attack. pic: Reuters
Hamas activity in a specific area was dismissed as a training exercise. After consultation with senior commanders in the middle of the night, it was decided to hold a situational assessment early in the morning. The attack happened before that took place.
The scale and brutality of the attack took the IDF by surprise and their defensive strategies, including a vastly expensive subterranean wall, proved ineffective. The barrier was designed to stop mass protests and limited infiltration but not a large-scale attack. Forces along the border had been reduced because of other requirements on the Lebanon border and in the West Bank, and the IDF had too much confidence in the barrier defences.
Through various intelligence sources, including material found in Gaza, it’s now understood that Hamas’s leader at the time, Yahya Sinwar, first conceived the idea in November 2016. A plan to attack Israel was approved in July 2019.
During those years, Hamas deceived Israel, convincing leaders it wanted economic prosperity rather than conflict.
A short war between the two in 2021 didn’t inflict as much damage on Hamas infrastructure and capabilities as Israel believed.
Hamas was close to launching the attacks on three occasions during 2022 but decided not to for unknown reasons. They eventually did so to take advantage of a Jewish religious holiday in 2023.
The inquiry has also compiled 41 separate findings of battles in specific kibbutzim, military bases and key roads. Those details are being presented to the individual communities over the coming days.
The Israeli government has repeatedly rejected calls for a State Commission of Inquiry, saying the time is not yet right because of the ongoing war.
Critics of Israeli Prime Minister Benjamin Netanyahu say he is avoiding personal responsibility for his role as Israel’s leader at the time.
World
Hamas releases last hostages included in first phase of ceasefire – as hundreds of Palestinian prisoners are freed
Hamas has handed the last four Israeli hostage bodies that were included in the first phase of the ceasefire deal to the Red Cross.
The bodies of four Israeli men have been handed over in exchange for the release of more than 600 Palestinian prisoners.
A Red Cross convoy carrying dozens of released prisoners has been seen leaving Israel’s Ofer prison in the West Bank before arriving in the Palestinian city of Ramallah.
The group got off the bus to cheers from hundreds congregated outside, with some of the released men – clad in green jackets and keffiyehs – hoisted aloft by the crowd.
It was not immediately clear when the next detainees would be released.
Meanwhile, the office of Israeli Prime Minister Benjamin Netanyahu confirmed the country had received the four bodies.
It said in a statement: “The coffins were handed over to the IDF at the Kerem Shalom crossing through Egyptian mediation. An initial identification process has now begun on Israeli territory.
“The families of the abductees are being continuously updated on the situation and will be given an official notification at the end of the full identification process.
“The public is asked to respect the families’ privacy and refrain from spreading rumours and information that is not official and well-founded. We will continue to update with reliable information in the future.”
The handover would complete both sides’ obligations under the Gaza ceasefire’s first phase, during which Hamas agreed to return 33 hostages, including eight bodies, in exchange for nearly 2,000 Palestinian prisoners.
Palestinian prisoners released from West Bank
Hours before the four bodies were transferred on Wednesday, the family of hostage Tsachi Idan said in a statement: “Our family has received with great sadness Hamas’s announcement that our beloved Tsachi is no longer alive and that his body will be returned to Israel during the night.”
It continued: “Since Tsachi was kidnapped, we received several signs of life, and in the previous deal last November, Tsachi was alive and expected to be released.
“We appreciate the tremendous love and support we are receiving from the citizens of Israel, the media, and the Nahal Oz community.”
The body of Tsachi Idan has been handed over. Pic: Bring Them Home
Egyptian mediators had earlier confirmed that they secured a breakthrough that would allow the handover of the final four hostage bodies due in the first phase of the deal after a days-long impasse.
Hamas said an agreement had been reached for the exchange of hostages for prisoners, but said their release would be conducted under a new mechanism.
It said the European Hospital in Khan Younis in southern Gaza was preparing to receive prisoners after their release.
Israel had previously refused to release more than 600 Palestinian prisoners and detainees on Saturday after accusing Hamas of breaching the ceasefire deal by staging what it considered an offensive public handover of hostages in Gaza.
The staged ceremonies in which living hostages and coffins containing hostage remains were displayed on stage before a crowd in Gaza drew strong criticism, including from the United Nations.
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Gaza hostage family mourned in Israel
Days earlier, the ceasefire deal which came into effect on 19 January was held up briefly when Hamas handed over the remains of an unidentified woman instead of mother-of-two Shiri Bibas before delivering the correct body the next day.
With the 42-day truce due to expire on Saturday, it also remains unclear whether an extension will be agreed or whether negotiations can begin on a second stage of the deal, which would see the release of the final 59 hostages left in Gaza.
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Hamas said that, so far, it had not received any proposal for the second stage.
Despite numerous hiccups, the ceasefire deal has so far held up.
But moving to a second phase would require agreements on issues that have proved impossible to bridge in the past, including the post-war future of Gaza and Hamas, which Israel has vowed to eliminate as a governing force.
Underlining the precariousness of the ceasefire, the Israeli military said a projectile was fired from Gaza but fell within
the enclave. It said it was investigating the incident.
The exchange comes on the same day as the funeral for Ms Bibas and her two sons – four-year-old Ariel, and nine-month-old Kfir – who came to symbolise the trauma felt by many Israelis after the 7 October attack.
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