Who Is Sam Bankman-Fried And How Did He Lose So Much Money, So Quickly?

It's a historic loss of wealth and it happened so, so fast.


Jack Dunhill


Jack Dunhill

Social Media Coordinator and Staff Writer

Jack is a Social Media Coordinator and Staff Writer for IFLScience, with a degree in Medical Genetics specializing in Immunology.

Social Media Coordinator and Staff Writer

FTX went from multi-billions to bankrupt in a shocking amount of time. Image credit: Poetra.RH/

If you’ve dared to enter the internet in the past week, you’ve probably heard of Sam Bankman-Fried (yes, his real name; no he didn’t change it). The crypto ex-billionaire has made huge headlines by experiencing the largest-ever fall in wealth in one day in recorded history, losing an astonishing 94 percent of his wealth (around $16 billion) in a single day after a bailout deal to save his failing cryptocurrency exchange fell through. 

That in itself was utterly insane, but what has come afterwards is truly rivalling it. Now, he is under intense federal investigation for how he dealt with company finances, and could be facing prison time for fraud if found guilty. In just eight days, the “King of Crypto” fell from amongst the richest in the world, to bankruptcy and fraud investigations. So, how did we get here? 


Who is Sam Bankman-Fried?

Bankman-Fried was born in 1992 to an upper-middle-class family, and gained a degree from Massachusetts Institute of Technology in physics with a minor in mathematics in 2014. Prior to graduating, he worked with a Wall Street stockbroker and continued this work afterwards, trading exchange-traded funds and becoming entrenched in stocks. In 2017, he founded Alameda Research, a trading firm, and became interested in the rising price of Bitcoin and how it could translate into profits. After attending a cryptocurrency conference in 2018, Bankman-Fried founded cryptocurrency exchange FTX in April 2019. 

According to himself, Bankman-Fried was an advocate for effective altruism and expressed the desire to donate most of his wealth to charity. By September 2022, a charitable trust started by him had donated $160 million to charity, and people working on behalf of him wished to donate $5 billion to Elon Musk’s takeover of Twitter

At its height, FTX stored around $16 billion in customer assets and was valued at $32 billion in early 2022, which was the main contributing factor to Bankman-Fried's obscene wealth. However, this would all come crashing down at a record rate. 

Crashing crypto, FTX, and the fastest loss of wealth in history

While Bankman-Fried made a concerted effort to make it appear like FTX had fantastic financials, behind the scenes the situation was very different. Crypto was crashing, falling far below expected prices, and crypto companies were in dire straits. Bankman-Fried was handing out hundreds of millions to help cover the fall in turnover, which was fine according to him as he supposedly had $2 billion in reserve cash to help weather the crypto storm. 


However, it soon became clear from a CoinDesk report (and subsequent tweet from Bankman-Fried himself) that most of the holdings in Alameda Research were in FTT, a token coin made by FTX. Binance owned a huge share of the coin thanks to an earlier equity deal in FTX, and the low trading volume of FTT meant that a large sell-off could be catastrophic.  

Such events came to pass as, in November 2022, Binance CEO Changpeng Zhao announced they were to sell their remaining FTT, due to an accusation that FTX were using customer deposits as loans for trading. Disputes between Zhao and Bankman-Fried and the volatility from the sell-off resulted in a decline in crypto prices, and FTX entered a liquidity crisis. Binance announced they would be buying out FTX, but then walked away after further accusations of FTX mishandling customer funds. FTX was declared bankrupt a day later. 

Now, Bankman-Fried is under full-scale investigation for using customer deposits to cover falling crypto prices, including potential criminal charges of fraud. There are significant hurdles that the prosecution must overcome – FTX was not registered in the US, so may not technically fall under US jurisdiction, and the other (and significantly more brutal) is that they must demonstrate intent to deceive investors. Law experts expect the defense to argue that Bankman-Fried was simply incompetent and not a criminal fraudster, though it remains to be seen whether this will be pursued. 


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  • cryptocurrency,

  • finance,

  • Bitcoin,

  • crypto,

  • FTX