FTX’s CEO Sam Bankman-Fried’s $16 Billion Fortune Being REMOVED as Company Faces Liquidity Problems
The CEO of crypto giant FTX lost $16 billion of his personal fortune when his company faced a liquidity crisis and was bailed out by his rival.
Sam Bankman-Fried, 30, who announced last year that his crypto firm would be big enough to buy Goldman Sachs, will see his fortune plummet to $1 billion after receiving a bailout from rival Changpeng Zhao’s Binance. Bloomberg reports.
The 94 percent loss is the largest one-day collapse ever among billionaires.
FTX’s token, which was worth nearly $20 earlier on Tuesday, is now down more than 75 percent to just over $5.
In comparison, Bitcoin, the most popular of the cryptocurrencies, currently has its token valued at $18,480.21
Zhao, 45, appeared to be gloating over his rival’s demise on Twitter, rebuking FTX’s decision to use its own cryptocurrency for more than $16 billion in collateral for another Bankman-Fried-owned company.
“Two big lessons: never use a token you created as collateral,” Zhao wrote after news of the bailout. “Don’t borrow if you run a crypto business.”
FTX CEO Sam Bankman-Fried (left) will see his fortune crash from $16 billion to $1 billion after his company is bailed out by crypto rival Binance CEO Changpeng Zhao
FTX’s token is down about 75 percent in value on Tuesday to just over $5
Zhao announced on Twitter that he will acquire FTX and appeared to rebuke Bankman-Fried’s decision to use his own cryptocurrency as collateral for his crypto trading company, Alameda.
Bankman-Fried is widely regarded as one of the biggest names in the crypto market, with personal wealth once peaking at $26 billion.
The young billionaire made headlines and pledged to shape the world by donating millions to political causes and charities.
Bankman-Fried owned about 53 percent of FTX worth about $6.2 billion, according to Bloomberg’s Billionaire Index.
However, his most valuable assets were in his crypto trading company, Alameda Research, which contributed $7.4 billion to his personal fortune.
Last Friday, reports revealed that a token issued by FTX, FTT, made up about 25 percent of Alameda’s $14.6 billion assets, and another token labeled “FTT Collateral” represented $2.16 billion.
Following the revelations, Zhao said his company would liquidate its holdings of FTT, crashing the token’s value by 80 percent.
Along with FTX, the value of Alameda is expected to fall to $1. It is currently unknown whether Zhao will rescue Alameda along with FTX, spreading fear among those who have invested in the crypto trading house.
On Tuesday morning, Zhao tweeted that FTX was asking for help during the liquidity crisis.
“There is a lot to deal with and it will take some time,” Zhao said of the acquisition. “This is a very dynamic situation and we are assessing the situation in real time.”
“Binance has the discretion to withdraw from the deal at any time,” he noted. “We expect FTT to be very volatile in the coming days as things develop.”
Zhao said the rescue will take some time and expects the FTT token to crash
While the cryptocurrency market remains volatile, FTX has fallen to just a fraction of other strong coins, with Bitcoin tokens (above) worth over $18,468
Bankman-Fried took to Twitter to apologize for the situation, saying it would take a while for the smoke to settle.
He assured investors would be protected during the bailout and thanked Zhao and Binance for saving his company.
Zhao, the richest man in the crypto market, is poised to increase his empire with the addition of FTX to Binance.
After seeing his peak net worth drop from $97 billion in January to $10 billion in the summer, Zhao’s net worth has seen a small rebound. His net worth is currently estimated at $16.4 billion.
Over the summer, Bankman-Fried saw his fortune drop 66 percent since it peaked at $26 billion.
He had poured $16 million into Super PACs in April, making him one of the largest donors to outside groups, and said he expects to give more than $100 million to Democrats in the next presidential election.