‘The Wolf of Wall Street’ Jordan Belfort joined ‘Maria Bartiromo’s Wall Street’ to discuss the fallout from the collapse of FTX and scrutiny facing A-list celebrities and the SEC chair.
Former FTX CEO Sam Bankman-Fried was one of the wealthiest people in the crypto industry before his empire collapsed. The downfall of the $32 billion trading platform is the largest-ever failure of a cryptocurrency exchange.
The once-dominant player in the world of virtual currency left customers and investors scrambling when Bankman-Fried and his company filed for Chapter 11 bankruptcy protection on Nov. 11 and 14.
Bankman-Fried co-founded the FTX trading platform in May 2019 with Zixiao "Gary" Wang. FTX began within Alameda Research, a crypto trading firm that Bankman-Fried and others founded in 2017.
Early life and Education
The 30-year-old is the son of two Stanford Law School professors. His father, Joseph Bankman, is a leading scholar in the field of tax law. His mother, Barbara Fried, has written extensively on questions of distributive justice in the areas of tax policy, property theory and political theory.
Bankman-Fried grew up in Hillsborough, California. As a high school student, he attended the Canada/USA Mathcamp, a summer program for mathematically gifted students.
Sam Bankman-Fried, founder and chief executive officer of FTX Cryptocurrency Derivatives Exchange, during an interview on an episode of Bloomberg Wealth with David Rubenstein in New York, on Aug. 17, 2022. (Jeenah Moon/Bloomberg via Getty Images / Getty Images)
Bankman-Fried went on to attend college at the Massachusetts Institute of Technology and graduated with a degree in physics and a minor in mathematics. In the summer of 2013, he interned for Jane Street Capital, a New York-based proprietary trading firm. After graduating from MIT, he became a full-time employee at Jane Street, where he worked for three years before starting Alameda Research.
In 2017, Bankman-Fried began a career in crypto trading, founding Alameda Research alongside Tara Mac Aulay.
Mac Aulay tweeted last week, "In April 2018, I and a group of others all quit, in part due to concerns over risk management and business ethics."
The firm's business model was trading crypto through global markets.
Bankman-Fried, along with friends at Alameda, moved as much as $25 million in bitcoin each day, according to New York Magazine.
Just two years after he founded Alameda, he moved to Hong Kong and started FTX.
This illustration photo shows a smartphone screen displaying the logo of FTX, the crypto exchange platform, with a screen showing the FTX website in the background in Arlington, Virginia on Feb. 10, 2022. (Photo by Olivier Doulier/AFP via Getty Images / Getty Images)
Building a Cryptocurrency Empire
Bankman-Fried built FTX into a business worth more than $40 billion in less than three years. He was seen as a white knight in the cryptocurrency community by providing financial lifelines to struggling crypto firms such as BlockFi, becoming known as crypto’s lender of last resort.
The crypto exchange moved its headquarters to the Bahamas in 2021, mostly to allow investors more flexibility and less regulation than what is available in the U.S.
The company’s large marketing push brought in celebrities like quarterback Tom Brady, basketball all-star Stephen Curry and comedian Larry David to promote its brand. It also secured the naming rights to the arena that is home to professional basketball's Miami Heat.
Silicon Valley poured money into FTX, with investors pumping in over $1.8 billion of capital over the course of three years, with few strings attached, The Wall Street Journal reported.
Former Trump economic adviser Steve Moore speaks on FTX’s downfall and how the cryptocurrency giant was involved in politics on ‘The Evening Edit.’
Bankman-Fried told the Financial Times in July 2021, "If we are the biggest exchange, [buying Goldman Sachs and CME] is not out of the question at all."
His ambitions expanded into politics. Ironically, he sought to strengthen crypto regulations in Congress, where he testified and regularly met with regulators.
Bankman-Fried’s fortune reached its peak in March at $26.5 billion, but fell to nearly $16 billion and then to zero in one week in November, according to Bloomberg's Billionaires Index.
He lost 94% of his wealth in a single day, the biggest wealth collapse in history, according to Bloomberg. Days later, Bankman-Fried stepped down as CEO and FTX filed for Chapter 11 bankruptcy in Delaware.
Recently, he donated $40 million to mainly Democratic causes in the midterm elections. He was the second-largest billionaire donor to Democrats, behind George Soros.
Reuters contributed to this report.