30-year-old Sam Bankman-Fried was considered a business genius in the field of cryptocurrency until just a few days ago and a visionary who developed a future idea of how money will function. As CEO of the crypto exchange FTX, he was in control. His fortune was estimated at 15 billion US dollars; he even bought into League of Legends : His company became the naming sponsor for the LoL team TSM. But that seems to be going up in smoke now.
This story is currently circulating about the CEO: In September, a story emerged about the 30-year-old CEO, whom many considered a kind of financial prodigy at the time. He was someone counted among a new generation of tech pioneers, something like “Frank Thelen in good.”
The story from September 2022 probably describes him best: As head of the crypto exchange FTX, he had an extremely good meeting with potential investors. Friedmann designed the vision of FTX as a ‘super app, with which you could do anything you want with the next dollar’ in a Zoom call:
One could use the dollar via FTX to
- buy Bitcoin
- exchange into any currency
- send to friends around the world
- use it to buy a banana.
The meeting impressed the potential investors: They invested $214 million in the 30-year-old’s company and raved about how fantastic the Zoom call was. One said it was one of those meetings that would “blow your hair back.”
It turned out that Bankman-Fried held this Zoom meeting while playing the MOBA League of Legends. An employee is quoted as saying:
I sit 3 meters away from him, walk over and think: Damn, that was really good. And then it turns out that the jerk was playing League of Legends the entire time during the meeting.
Super Bowl ad costs $25 million
What has he done? Bankman-Fried used the money for a few things:
- He had an ad spot with the famous US comedian Larry David (Curb Your Enthusiasm, Seinfeld) aired during the Super Bowl. That alone was said to have cost about $25 million.
- He bought into the LoL team TSM and was a naming sponsor there.
Bankman-Fried was celebrated as a revolutionary tech genius with a ‘Robin Hood mentality’, who sleeps in a beanbag so that he stays “in work mode” (via bloomberg)
What does he have to do with LoL? Bankman-Fried once explained (via twitter), he hardly sleeps and works a lot. When he is not working, he is often busy in League of Legends:
“I play a lot more than one would expect from someone who regularly trades sleep for work.
Why? Well, there is one obvious answer. The one thing that everyone says about LoL who plays it is: I wish I didn’t play it […]
Some people drink too much, some gamble – I play League of Legends.
The success of his company lived off the image of the founder as a genius who understands things
Why was this so crucial? As the site Kotaku explains, the success of the FTX company depended almost exclusively on investors having full trust in Bankman-Fried and his genius.
Kotaku writes: People wouldn’t have invested in FTX, but actually in Bankman-Fried, the Magic: The Gathering nerd and the financial genius.
Kotaku believes that the motivation to invest in FTX was: Even if you don’t understand all the crypto stuff, there’s this one guy who understands it all and who earns you billions of dollars with his really clever ideas.
The coin falls, a merger fails – fortune is in free fall
What went wrong now? Bankman-Fried is crumbling his empire right now. In an article from November 2, the crypto site Coindesk explained that Bankman-Fried holds $14.6 billion worth of the FTT coin, which FTX developed, through another company.
This was seen as an extremely bad sign if a single company holds so much money in a cryptocurrency. This apparently severely shook confidence in the coin.
His company FTX, which was actually supposed to be acquired by the competitor Binance, is now in trouble – Binance has withdrawn the acquisition offer.
Binance has even announced that “after the recent revelations” it will withdraw its approximately $2.1 billion from FTT, which apparently hurt a lot.
$14.6 billion “wiped out”
As a result, the price of the FTT coin has plummeted: It fell from $26 to $4. A year ago, in September 2021, the coin was even worth $84, and now 96% of that is gone.
Also, Bankman-Fried’s “net worth,” his fortune, has shrunk enormously in a short time: As Bloomberg reports, the value fell by 94% in one day on November 8:
- Before the crash of his company, Bankman-Fried’s value was seen at $15.2 billion
- After the crash, Bankman-Fried is seen at $991.5 million
This resulted in $14.6 billion being “wiped out” overnight.
This is once again one of those crypto stories that reminds you how volatile and fleeting the whole business of virtual currency is, which one cannot see and which is heavily based on trust and belief. Once trust is shaken, it seems to go down unstoppable.
Man loses $2.2 billion in one day due to Bitcoin and MMORPG scandal
Bankman-Fried resigns from all offices
Update 11/12, 12:45 PM: The crypto exchange FTX filed for bankruptcy on Friday, November 11. CEO Sam Bankman-Fried has resigned from all offices.
