Everything You Need to Know about FTX Founder Sam Bankman-Fried

FTX CEO John Ray III and Sam Bankman-Fried traded fresh barbs Thursday, 19 January 2023

Sam Bankman-Fried, is a finance and cryptocurrency entrepreneur and the co-founder and former chief executive officer (CEO) of the now-bankrupt crypto exchange FTX. According to Investopedia, he rose to prominence as head of one of the world's largest cryptocurrency exchanges, with a personal net worth once exceeding $26 billion, before an abrupt end to his digital currency empire in early November 2022.

Prior to FTX's collapse, Bankman-Fried was ranked the 41st richest American in the Forbes 400, and the 60th richest person in the world by The World's Billionaires. His net worth peaked at $26 billion. In October 2022, he had an estimated net worth of $10.5 billion. By November 8, 2022, amid the bankruptcy of FTX, his net worth was estimated to have dropped 94 percent in a day to $991.5 million according to the Bloomberg Billionaires Index, the largest one-day drop in the index's history. On November 11, 2022, the Bloomberg Billionaires Index considered Bankman-Fried to have no material wealth.

Before Bankman-Fried's wealth disappeared in November 2022, Bankman-Fried was a major donor to Democratic political campaigns and planned to spend tens of millions in the 2024 U.S. presidential election.

In the aftermath of the collapse, Bankman-Fried made a bizarre media blitz, offering the public a mea culpa, apparently without grasping the gravity of his wrongdoing. He confessed that he had gotten "a little cocky" and "wasn't spending any time or effort trying to manage risk on FTX" but insisted that he "didn't knowingly commingle funds" and "didn't ever try to commit fraud."

He acknowledged "messy accounting" and "huge management failures," but his explanation did little to assuage the losses suffered by a massive number of customers. For all his intent on being an effective altruist, it was as if he were unaware of the age-old aphorism "The road to hell is paved with good intentions."

On December 12, 2022, he was taken into custody at his home in the Bahamas; the following day, he was indicted on eight criminal charges by the U.S. Department of Justice and two separate civil charges by the CFTC and the Securities and Exchange Commission (SEC).

In an interview with the Wall Street Journal published Thursday, Ray said the founder's recent comments have not been productive or helpful.

"We don't need to be dialoguing with him," Ray told the Journal. "He hasn't told us anything that I don't already know."

In a text message response, per the report, Bankman-Fried shot back: "This is a shocking and damning comment from someone pretending to care about customers."

Since taking over in November, Ray has moved to overhaul FTX and recover lost assets to pay back customers and creditors. He's slammed Bankman-Fried and former staffers for haphazard bookkeeping and a lack of management experience.

"FTX in my view now gets painted as a crypto problem. I think if you really peel enough onion layers, it's not really a crypto problem to happen here, it's fraud. And I think we should not pretend it's something else," Brad Garlinghouse, CEO, Ripple, told CNBC.

Garlinghouse also spelled out Ripple's own exposure to the collapsed crypto exchange. In an interview Wednesday, he said that Ripple had leased some $10 million of XRP to FTX, which "they used on various things related to FTX." XRP is the native cryptocurrency of Ripple.

Sam has called some claims made by the firm's lawyers about FTX US "extremely misleading". He added FTX US "was and is solvent, likely with hundreds of millions of dollars in excess of customer balances". The lawyers failed to include $428 million in FTX US' bank accounts as an asset in a presentation submitted to the court.