Until recently, Sam Bankman-Fried, or SBF, was crypto’s golden boy, known for building his cryptocurrency exchange, FTX, into a $32 billion giant in just two years.
But the disheveled, left-leaning 30-year-old gamer was living a lie. SBF, who claimed to be a minimalist philanthropist, had used customer funds to prop up his failing crypto empire and fund his lavish lifestyle.
Amid the revelations and the broader retrenchment of the crypto industry, FTX and its web of investments—which included SBF’s trading business, Alameda Research, as well as over 200 other crypto companies—have dramatically unraveled.
Meanwhile, SBF, the former “white knight” of crypto who was once reportedly worth $26.5 billion, says he’s down to his last $100,000.
Former FTX customers, academics, and even the crypto faithful have alleged that Bankman-Fried’s now defunct crypto exchange was an outright “Ponzi scheme,” leading to a deluge of civil lawsuits against him and his company. There have yet to be any rulings on the cases.
Despite the allegations, and admissions by SBF of mistakes, lawyers contacted by Fortune said it’s too early to declare FTX a true “Ponzi scheme”—though they say prosecutors may eventually do so.
“I don’t know if it’s a Ponzi scheme, and it’s probably going to be a while before we do know,” said Thomas P. Vartanian, executive director at the nonprofit Financial Technology and Cybersecurity Center.
Vartanian, who has…
