Thursday, December 1, 2022

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How this 30-year-old businessman lost $16 bn in few days

New Delhi: Sam Bankman-Fried, a former co-founder of FTX, lost his whole $16 billion fortune, one of the largest-ever wealth destructions in history.

The collapse of his crypto empire, which filed for bankruptcy along with his departure on Friday, has rendered the holdings of the businessman once compared to John Pierpont Morgan worthless. The 30-year-value old’s was $26 billion at its highest point, and it was still almost that much at the beginning of the week.

Due to a potential trading halt, the Bloomberg Billionaires Index has downgraded the $8 billion valuation of FTX’s US business, which Bankman-Fried owns approximately 70% of, to $1. Reuters noted that Bankman-$500 Fried’s million plus investment in Robinhood Markets Inc. was owned through his trading firm, Alameda Research, and may have been used as collateral for loans; as a result, it was also excluded from the assessment of his wealth. Alameda and FTX.US were also included in the bankruptcy filing.

Bankman-Fried has resigned as CEO, and John J. Ray III will take over, FTX announced in a statement on Friday as it revealed it had filed for Chapter 11 bankruptcy. During bankruptcy, workers are urged to stick with the company and “help Mr. Ray and independent professionals.”

This week’s collapse of Bankman-empire Fried’s was caused by a liquidity crisis at one of its affiliates. Customers should close down any positions they choose to, according to FTX.US, its US exchange, which said on Thursday that trading may be suspended in a few days. Authorities in the Bahamas, where FTX.com is headquartered, froze the assets of its linked parties and local trading business.

There’s a chance Bankman-Fried holds holdings that aren’t included in the Bloomberg index. About $1 billion in profits were produced by Alameda and FTX together last year.

Website with tech news He had more than $500 million invested in funds administered by Sequoia and other venture capital firms, according to The Information, which also revealed that he had invested in the media start-up Semafor. However, if Alameda holds those assets, its losses may cause their total loss.

According to a person with knowledge of the situation, Bankman-Fried is being looked into by the US Securities and Exchange Commission for possible violations of securities laws.

 

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