Ross Clark Ross Clark

Crypto is being hoisted by its own petard

Sam Bankman-Fried (Getty Images)

Like Liz Truss, Sam Bankman-Fried will be the stuff of pub quizzes: who lost his entire $16 billion fortune in days? A quick trawl of the internet suggest his only real challenger in losing so much money so quickly was Masayoshi Son, the founder of Softbank, who was estimated to have made a paper loss of $70 billion in the dotcom crash. But he wasn’t completely wiped out, and retained considerable wealth as Softbank rose again.

Bankman-Fried, on the other hand, is believed now to be worth pretty much zero following last week’s collapse of the crypto exchange he founded, FTX. At its peak, Bankman-Fried’s stake is estimated to have been worth $26 billion, and it was still worth many billions in the days before its sudden collapse. All this by the age of 30.

It is possible that many people will not be mourning the sudden demise of Bankman-Fried’s wealth – although some may well do, including the many left-liberal causes to which he generously contributed during his brief life among the super-wealthy. One of them was Joe Biden’s 2020 election campaign, which received $5.2 million of his money. He is also believed to have lavished $40 million on Democratic candidates in last week’s midterm elections.

For many others, if they have heard of the man at all, Bankman-Fried will be the epitome of greed in the mysterious world of crypto. Too late, perhaps, Bankman-Fried realised that he didn’t fully understand it, either. In the passing of FTX he apologised for failing to appreciate that the company’s coffers were not quite as full as he thought they were, and that they were unable to sustain a sudden run of investors wanting to withdraw their money.

Bankman-Fried’s crypto empire seems to have consisted of two main entities: FTX, which traded cryptocurrencies on behalf of clients, and Alameda Research, which was trading cryptocurrencies on its own account.

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