A mere seven weeks later and Bankman-Fried’s crypto exchange is now on the brink of ruin, amid what its investors are calling “a liquidity crunch”.
Faced with a vast financial black hole and rescue talks in tatters, FTX and its sister trading house Alameda Research are expected to go bust, taking the large majority of Bankman-Fried’s $20bn (£17bn)-plus paper fortune with it.
A raft of financial luminaries, such as BlackRock, Canada’s Ontario Teachers’ Pension Plan, and SoftBank stand to lose hundreds of millions of dollars too, as well as the hedge fund billionaires Paul Tudor Jones and Izzy Englander.
Sequoia Capital has already said it will mark down its investment of over $210m to zero, before adding “the current situation is developing quickly” – which may be a reference to reports that the company faces investigations by the US finance watchdog, the Justice Department, and the Commodities Futures Trading Commission
Yet, investors can’t say they weren’t warned. Earlier in the year, in a barely coherent interview with Bloomberg, the entrepreneur had attempted to explain a growing corner of crypto-investing known as “yield farming” and in doing so led his interviewer to draw comparisons with a ponzi scheme – an approach that Bankman-Fried suggested was “cynical”.
But what really makes Bankman-Fried stand out as the poster boy for all that is wrong with the Alice in Wonderland world of crypto is that he wasn’t a crazy outrider. He…
