Sam Bankman-Fried chief executive of FTX, a crypto derivatives exchange that offers products unavailable to traders in the U.S., at the offices in Hong Kong, May, 26, 2021. Over the last two years, the 30-year-old entrepreneur gained a reputation as one of the smartest, most trusted figures in crypto. He built his cryptocurrency exchange FTX into a $32 billion company. He spent hundreds of millions of dollars to prop up other struggling crypto companies.
Many of crypto's foundational myths have already been punctured this year, and Bankman-Fried’s rapid fall suggests that no company in this freewheeling, loosely regulated industry is safe from extreme volatility. As news spread of FTX’s collapse, crypto markets took a battering, with bitcoin and ether both dropping more than 15% since Tuesday.
“It’s like if the person you thought was Hermione turned out to be Voldemort,” crypto journalist Laura Shin tweeted Wednesday. Until this week, Bankman-Fried, known by his initials SBF, was widely regarded as one of the industry’s most astute and formidable leaders. When the crypto market crashed in May, Bankman-Fried was hailed as a savior. He lent the troubled crypto company Voyager Digital $485 million and bailed out BlockFi, a crypto lending firm, with a $400 million credit line.
Over the weekend, Zhao announced on Twitter that Binance would sell its holdings of FTT. He insisted that he was not engaging in a “move against a competitor.” But he later compared the FTT token to luna, a cryptocurrency that crashed in May, setting off a broader crisis. On Tuesday, Bankman-Fried struck the agreement with Zhao. “Binance has shown time and again that they are committed to a more decentralized global economy,” he wrote. “We are in the best of hands.”