How Sam Bankman-Fried’s crypto empire collapsed
David Yaffe-Bellany
In less than a week, cryptocurrency billionaire Sam Bankman-Fried went from industry leader to industry villain, lost most of his fortune, saw his $32 billion company plunge into bankruptcy and became the target of investigations by the Securities and Exchange Commission and the Justice Department.
But in a wide-ranging interview Sunday that stretched past midnight, he sounded surprisingly calm. “You would’ve thought that I’d be getting no sleep right now, and instead I’m getting some,” he said. “It could be worse.”
The empire built by Bankman-Fried, who was once compared to titans of finance such as John Pierpont Morgan and Warren Buffett, collapsed last week after a run on deposits left his crypto exchange, FTX, with an $8 billion shortfall, forcing the firm to file for bankruptcy. The damage has rippled across the industry, destabilizing other crypto companies and sowing widespread distrust of the technology.
Besides some Twitter posts, messages to employees and occasional texts to reporters, Bankman-Fried, 30, has said little publicly over the past week. In the interview Sunday, he voiced numerous regrets over the collapse of FTX.
But he would offer only limited details about the central questions swirling around him: whether FTX improperly used billions of dollars of customer funds to prop up a trading firm that he also founded, Alameda Research. The Justice Department and the SEC are examining that relationship.
Alameda had accumulated a large “margin position” on FTX, essentially meaning it had borrowed funds from the exchange, Bankman-Fried said. “It was substantially larger than I had thought it was,” he said. “And in fact the downside risk was very significant.” He said the size of the position
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