Sam Bankman-Fried: ‘King of Crypto’ suffers stunning fall from grace

Once hailed as modern JP Morgan, former mogul is ‘marked by striking contradictions’

Sam Bankman-Fried outside court in New York on 22 December 2022
Bankman-Fried’s wealth peaked at $26 billion in early 2022, when he was ranked 60th richest person in the world
(Image credit: Stephanie Keith/Bloomberg via Getty Images)

Sam Bankman-Fried, the self-styled ‘King of Crypto’, is to plead not guilty to criminal charges relating to cheating investors and looting billions of dollars at his now bankrupt FTX cryptocurrency exchange.

Forbes said “it’s a stunning fall from grace for Bankman-Fried, who had been heralded as a modern J.P. Morgan for swooping in to save troubled crypto firms before his own firm blew up.”

What is his background?

Born in 1992 in California, where both his parents taught as professors at the Stanford Law School, Sam Bankman-Fried, known as SBF, attended the prestigious Massachusetts Institute of Technology, where he graduated with a bachelor’s degree in physics and a minor in mathematics.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.


Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

In 2017, he co-founded Alameda Research, a quantitative trading firm, before launching FTX, a cryptocurrency derivatives exchange, in 2019.

The Guardian said the “30-year-old crypto mogul rode a boom in the value of bitcoin and other digital assets to become a billionaire several times over and an influential political donor in the United States”.

He poured hundreds of millions of dollars into mainstream marketing to promote his exchange, including the naming rights to leading esports league TSM and the NBA Miami Heat’s arena. It was also reported he offered to help Elon Musk part-fund his takeover of Twitter.

His wealth peaked at $26 billion in early 2022, when he was ranked the 60th richest person in the world by The World's Billionaires. However, by October 2022 his fortune had dropped to an estimated $10 billion and was wiped out almost overnight when FTX collapsed in early November after a wave of withdrawals. He was freed on a $250 million bond following his extradition in December from the Bahamas, where he lived and where the exchange was based.

He faces charges of wire fraud, commodities fraud, securities fraud, money laundering and campaign finance law violations, and could serve up to 115 years in prison if convicted.

A man of ‘striking contradictions’

“Bankman-Fried is marked by striking contradictions”, said Yahoo! Finance, which ran a profile of him in 2021.

“On the one hand, he is a classically driven businessman who sleeps four-hour nights, famously catnapping in a beanbag chair at the office so subordinates can wake him at any hour for guidance,” said the news site. “Yet Bankman-Fried is also disarmingly reflective, candid, and almost academic in his apparent effort to give dispassionate and truthful answers.”

A self-described “Benthamite,” “effective altruist” and vegan, he was reported as having “a Robin Hood-like philosophy” by Bloomberg in April last year, after the billionaire vowed to give away his fortune.

Yet there is another, darker side to him which manifested in the way he ran his companies, according to John Ray, who oversaw the $23 billion bankruptcy of Enron and took over as CEO of FTX after Bankman-Fried stepped down in November.

In what Forbes described as “a scathing rebuke of Bankman-Fried’s leadership”, Ray said, “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here.”

“From compromised systems integrity and faulty regulatory oversight abroad to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented,” he added.

“Looming over our whole conversation,” said Kelsey Piper in Vox after Bankman-Fried began an exchange with her on Twitter in November last year, “was the fact that people who trusted him have lost their savings, and that he’s done incalculable damage to everything he proclaimed only a few weeks ago to care about.”

“The grief and pain he has caused is immense, and I came away from our conversation appalled by much of what he said. But if these mistakes haunted him, he largely didn’t show it,” she concluded.

Continue reading for free

We hope you're enjoying The Week's refreshingly open-minded journalism.

Subscribed to The Week? Register your account with the same email as your subscription.