Who is the billionaire founder of FTX, who became famous as a philanthropist and eccentric and ended up in prison

It was less than two years between Sam Bankman-Fried’s rise as a young multibillionaire philanthropist who owned a cryptocurrency empire and his arrest in the Bahamas on Monday night (12).

Founder of FTX, a cryptocurrency platform that went bankrupt last month, taking more than $1 billion from its customers, according to Reuters, Bankman-Fried was indicted on Tuesday (13) for fraud and violation of campaign finance rules in the US . He faces charges from the US federal court and the SEC, the US Securities and Exchange Commission.

SBF, as it is known, built its public persona on top of philanthropy and what it calls “effective altruism”, defined by it in a recent interview with the BBC as the search for “what practical things you can do with your life to have the most possible positive impact on the world.”

It said that his goal was to donate 99% of his fortune, valued at US$ 26 billion in the first half of this year. He was the second-largest individual donor to the Democratic Party’s campaign in the midterms, the US legislative elections that took place in November, behind only George Soros.

His contributions amounted to almost US$ 40 million – before the lawsuits he even said in an interview that his goal was to reach US$ 1 billion in donations to election campaigns. FTX filed for bankruptcy on Nov. 11, three days after the US election. In recent years, it has also financed media outlets and donated to social causes, in addition to bailing out smaller crypto companies from bankruptcy.

With the aura of an eccentric billionaire, bouncy hair and a slovenly air, he shared his day to day sleeping on poufs and sofas at the FTX headquarters in the Bahamas on Twitter, as well as comments on matches in the online game League of Legends, which he says he is obsessed with. He also attended events wearing a T-shirt and shorts, including with authorities, such as an event in April where he took to a stage in the Bahamas with former US President Bill Clinton and former British Prime Minister Tony Blair.

The son of professors at the Stanford University School of Law in San Francisco, one of the most prestigious in the world, SBF studied mathematics and physics at MIT (Massachusetts Institute of Technology) and began his career at Jane Street, a New York brokerage, before embark in 2017 on the world of cryptocurrencies.

It was in 2018 that he founded FTX, a brokerage that surfed the rise of digital currencies and became one of the largest cryptocurrency platforms in the world. The company officially made him a billionaire last year, and, according to Forbes, only Mark Zuckerberg accumulated so much wealth in such a short time. From then on, he began to circulate among celebrities and circles of high American politics, and graced dozens of magazine covers.

But according to the SEC, the US Securities and Exchange Commission, it was a “house of cards based on fraud” that began to crumble “as he spent lavishly on offices and condominiums in the Bahamas and invested billions of client dollars in hedge funds. “, says document from the regulatory agency this Tuesday.

According to the agency, Bankman-Fried has defrauded more than $1.8 billion from FTX clients since 2019 in a “brazen scheme” in which he diverted money to his other company, crypto-based hedge fund company Alameda. Alameda customers were also deceived by fraudulent balance sheets, according to the indictment.

Investigations advanced after FTX announced bankruptcy in early November, after a specialized portal, CoinDesk, pointed out coincidences in the balance sheets of the brokerage and Alameda. After the report, traders began to withdraw their funds from FTX en masse, a crisis that worsened when Binance, the world’s largest exchange, withdrew an offer to acquire Bankman-Fried’s company. This dropped the value of the company, until then considered the third largest in the world in the sector, and it filed for bankruptcy on November 11th.

SBF should have appeared before the US Congress to testify this Tuesday, as defined before his arrest. John Ray, who took over as CEO of the company after the founder’s resignation, admitted to lawmakers that there was no distinction between FTX’s and Alameda’s operations, calling it a “total record-keeping failure” with “absolutely no internal controls.”

He also stated that he does not believe that the company’s financial statements are reliable. “We lost $8 billion of customer money. I don’t trust a single piece of paper in this organization,” he said.

SBF’s defense has not yet manifested itself, but, in interviews after the bankruptcy of FTX, the American apologized and stated that he did not consciously mix the money of the two companies.