Out of nowhere, 30-year-old Sam Bankman-Fried became a billionaire mover and shaker in the world of cryptocurrency. Careful to make friends of powerful Democrats and media columnists alike, he threw money around the halls of Congress – and everywhere else he went – while threatening to disrupt Chicago’s financial futures industry.
Known by his initials, “SBF” is a billionaire no more. The house of cards he built over the past several years came crashing down in a matter of days.
His FTX crypto exchange and the entangled Alameda Research hedge fund are now in bankruptcy, amid reports that customer funds are missing. As many as a million of SBF’s customers may have lost whatever they had in their trading accounts, which, unlike traditional bank and brokerage accounts, are not guaranteed by the federal government against a company’s failure.
Media reports are drawing comparisons to the fall of Enron Corp. or the Bernie Madoff Ponzi scheme. Everyone from police in the Bahamas to U.S. Sen. Dick Durbin, D-Ill., is demanding answers from SBF, who sent a series of tweets saying, among other things, he wants to make his customers whole.
Don’t count on it.
“From compromised systems integrity and faulty regulatory oversight abroad to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented,” John Ray III, who helped oversee Enron’s bankruptcy,…
