As the founder of the crypto exchange FTX, Sam Bankman-Fried saw his net worth drop Friday after a problem led the company to declare bankruptcy. The Bloomberg Billionaires Index analyzes the net worth of some of the world's richest people, making him one of the 100 richest persons in the world.
On Friday morning, just before the bankruptcy declaration, the share price of FTX was $1.
I apologize deeply,” Bankman, a major Democratic fundraiser, tweeted again on Thursday. He also assured them that he would not give up on trying to save the business.
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The Early Life of Sam Bankman Fried
Bankman-Fried was born into a family of professors in the early 1990s, and she spent her early years at Stanford. He was born and raised in California to a prominent Jewish family; his parents, Barbara Fried and Joseph Bankman are both professors at Stanford Law School.
The current dean of the Mailman School of Public Health at Columbia University is his aunt Linda P. Fried. His sibling, Gabe Bankman-Fried, is the director of the non-profit Guarding Against Pandemics and a former Wall Street trader. He participated in Canada/USA Mathcamp, a summer program for high school students with a strong mathematics background.
The Hillsborough institution Crystal Springs Uplands School was where he finished his secondary education.
Bankman-Fried studied at MIT for six years, from 2010 to 2014. There, he was a resident of Epsilon Theta, a gender-neutral dorm. He earned a bachelor's degree in physics with a minor in mathematics in 2014.
Work Experience and Career
Bankman-Fried worked as a trader at Jane Street, a global liquidity provider, and trading firm, after completing his studies at MIT. Since leaving in 2017, he has been running his own quantitative trading firm, Alameda Research. Until 2019, he also served as the company's CEO.
In 2018, Bankman-Fried, who had been operating out of Alameda, relocate to Hong Kong because of the city's status as a global hub for bitcoin and events pertaining to the industry.
In April of this year (2019), he started the bitcoin derivatives exchange FTX. As the business expanded, he decided to relocate the company's headquarters from Hong Kong to the Bahamas when COVID-19 was passed to make use of the more lax regulatory environment there.
In the same month that FTX filed for Chapter 11 bankruptcy in November 2022, CEO Bankman-Fried resigned. On that same day, he also submitted a bankruptcy petition for Alameda Research.
The Alameda Research
In 2017, Sam Bankman-Fried founded Alameda Research. He claims that the market for cryptocurrency trading at the time had a lot of potentials but lacked the necessary liquidity to realize it. One of the main reasons for starting the company, according to Bankman-Fried, was the lack of a robust system in place for exchanging digital assets.
An $80 million deal between Alameda Research and Reef Finance, another cryptocurrency startup, fell through in March 2021 due to disagreements over the legality of the contract and the vesting term for the digital tokens being traded. Reef Finance CEO Denko Mancheski claimed that Alameda Research breached the terms of the agreement by listing the first batch of tokens (valued at around $20 million) for sale on Binance, a digital currency exchange.
(Almost all trades in cryptocurrencies and other digital assets are recorded in an immutable digital ledger known as a blockchain.) Mancheski told the cryptocurrency financial news site Coindesk that all agreements between Reef and Alameda had been made using a messaging app and that Alameda had presented “no legal agreement” or “any kind of papers” to back up Mancheski's claims.
“They portray themselves as a respected VC [venture capital] fund when in reality they merely influence projects/retail using their reputation,'” Mancheski said of Alameda's business tactics. Alameda denied there was ever an agreement for a vesting term and blamed Reef for breaking the contract.
Sam Bankman Fried's Net Worth
According to the Bloomberg Billionaires Index, Mr. Bankman-Fried was worth an estimated $15.6 billion as of Monday, putting him in the top 100 of the world's wealthiest people. His value was pegged at around $1 billion by Bloomberg on Wednesday.
Bloomberg says this 94% wipeout is the largest one-day collapse ever among millionaires. Both FTX and Alameda Research, the crypto trading firm he also created, was valued at $1 by the Bloomberg index, despite the fact that such valuations involve elements of both art and science.
JUST IN: Sam Bankman-Fried’s net worth is now $0 down from $16 billion, according to Bloomberg Billionaires Index.
— Watcher.Guru (@WatcherGuru) November 11, 2022
The Bloomberg Billionaires Index ranks the 500 wealthiest persons in the world every day and provides detailed biographies of each of them. Bloomberg's 500 wealthiest individuals have an average fortune of $4.7 billion.
Mr. Bankman-Fried is a member of the effective altruism philosophy, which argues that people can have the greatest good impact on society if they become wealthy and then donate the majority of their wealth to worthy causes. He was also a major financial backer of Democratic Party candidates.
Final Lines
As of Monday, Mr. Bankman-Fried was worth an estimated $15.6 billion, according to the Bloomberg Billionaires Index. The index gives a value of just $1 to both FTX and Alameda Research, which he founded.
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