Not long ago, Sam Bankman-Fried was the king of the cryptocurrency world.
Last week, the bottom fell out. On Friday, his crypto exchange, FTX, filed for bankruptcy, according to Reuters.
But it gets worse.
Reuters, citing sources it did not name, said at least $1 billion of customer funds are gone.
Further, Bankman-Fried, moved $10 billion of customer funds from FTX to his trading company, Alameda Research, Reuters reported, with possibly up to $2 billion of that now missing.
Reuters reported that Bankman-Fried, who is reportedly in the Bahamas, texted Reuters that he “disagreed with the characterization” of the $10 billion move saying, “We didn’t secretly transfer.”
“We had confusing internal labeling and misread it,” he texted. When asked about missing funds, he replied with question marks but did not answer, Reuters reported.
The collapse of Bankman-Fried’s empire is a major event for the cryptocurrency world, but also for the Democratic Party, according to Fortune.
At the age of just 30, Bankman-Fried was the party’s second-biggest individual donor over the 2021-2022 election cycle, in the 2021–2022 election cycle, with $39.8 million in donations, $36,793,956 of which went to the Democratic Party, according to OpenSecrets.
First place, by the way, went to billionaire George Soros at a little over $128 million.
Bankman-Fried had big plans going forward, Fortune reported, saying he had a “soft ceiling” of $1 billion for the 2024 presidential cycle.
But now, all that is just talk after his net worth dropped from $15.6 billion to potentially below $1 billion, on Tuesday alone, according to Forbes.
Bankman-Fried’s empire began to fall Sunday when the head of a rival crypto exchange said he would dump all FTX-linked coins. At one point, the rival exchange — Binance – appeared ready to buy FTX but then backed out, sealing the doom of FTX, which appeared to be fiscally too unstable to pay out the money that customers were demanding.
(The U.K. Guardian explored the “key role” Binance played in the FTX disaster in an article published Friday. The world’s largest cryptocurrency exchange, Binance has its own controversies, as Reuters reported in September.)
Fortune noted that the collapse has caused a political pickle for Democrats, “who have drawn huge donations from crypto figures while taking tentative steps toward regulating the space this year.”
For example, as noted by the Washington Free Beacon, Bankman-Fried, met twice this spring with Steve Ricchetti, a top adviser in the Biden White House.
But whatever the impact on the world of political fund-raising, there’s no doubt the implosion of Bankman-Fried’s exchange had a devastating impact on the crypto market.
“The collapse of FTX and the uncertainty it has brought to the industry has been another damaging blow,” wrote Craig Erlam, senior market analyst for foreign exchange market maker Oanda, CoinDesk, a news site that focuses on cryptocurrencies.
“How damaging it will be will depend on what further details appear in the coming days but right now, prices remain under pressure and vulnerable to further sharp declines,” he said.
This article appeared originally on The Western Journal.
