His fortune had been estimated at $26 billion. He would strut around in shorts and a T-shirt with disheveled hair at conferences and generously provide funding to political officials, primarily Democrats. He recruited celebrities to promote his venture, such as Brazilian supermodel Gisele Bündchen and her then-husband, NFL star Tom Brady. This was during the Bitcoin frenzy of 2021 and 2022.
But on October 3, 31-year-old Sam Bankman-Fried, aka SBF, will be taken from his prison cell to appear at the first day of his trial in Manhattan, and the "Mozart of crypto" has nothing left. The son of professors from Stanford University’s Law School in California, he himself studied mathematics and physics at the prestigious MIT. He has now been abandoned by his main associates as well as his former girlfriend Caroline Ellison, who have chosen to cooperate with US courts.
Bankman-Fried faces more than a hundred years in prison in relation to the largest cryptocurrency-related bankruptcy in history: the FTX platform. He is accused of diverting clients’ money to reinvest it in high-risk bets in the Bahamas through a trading subsidiary called Alameda.
Bitcoin, the most popular cryptocurrency, has survived the turmoil and is currently trading at around $27,200, which is 40% higher than a year ago but less than half of the $69,000 peak it reached in November 2021 during the speculative frenzy. No one believes that these currencies, which have no underlying assets, are secure, as the platforms meant to host them often turn out to be traps, like FTX, the platform founded by SBF.
The crisis has its roots in 2021 when the post-Covid bubble began to deflate. The value of many cryptocurrencies started to plummet, as did some trading platforms, but FTX appeared to be a safe haven, like its rival, Binance. Things took a turn for the worse in November 2022, when an article by the media outlet CoinDesk revealed that Alameda had converted a significant portion of its assets into FTT, a cryptocurrency created by FTX, exposing it to a currency collapse.
Savers rushed to withdraw their funds, adding to the panic. Bankman-Fried tried to seek salvation from his rival, Binance, but it abandoned him. On Sunday, November 6, 2022, Binance's CEO Changpeng Zhao, a 45-year-old Chinese-Canadian entrepreneur, decided to withdraw around $500 million in cryptocurrencies from the FTX platform.
The fall was inevitable. On Friday, November 11, the company filed for bankruptcy with a Delaware court, along with approximately 130 subsidiaries, in what appeared to be the largest collapse in the world of cryptocurrencies.
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