Sam Bankman-Fried started the cryptocurrency exchange FTX. On Friday, after a crisis forced the company to file for bankruptcy, FTX’s value dropped so much that it was almost worthless.
According to the Bloomberg Billionaires Index, which tracks the net worth of some of the world’s wealthiest people, Bankman was worth about $16 billion on Monday. This made him one of the 100 wealthiest people in the world.
But by Friday morning, before the bankruptcy news came out, FTX was worth $1. In a short series of tweets on Thursday, Bankman, a major Democratic donor, said, “I am truly sorry.”
He also said he would keep trying to save the business. “So, this week, we’re doing everything we can to bring in more cash. I can’t promise you anything about that.
I’m going to try, though. And give them everything I have if that will help.” The failure of FTX is not just about money.
The company also sponsored significant sports teams and events, such as Formula One racing, Major League Baseball, and a sports arena in Miami.
Mercedes said that starting this weekend, it would take FTX out of its race cars. There are other problems with Bankman-Fried as well.
On Thursday, someone who knew about the situation said that the Justice Department and the Securities and Exchange Commission were looking into FTX to see if any crimes or securities violations had been done.
The main focus of the investigation is whether or not FTX used customer deposits to pay for bets at Alameda Research.
In traditional markets, brokers are expected to keep their clients’ money separate from other assets of the company.
Regulators can punish people who break the rules. When it mixed its own bets with those of its clients about a decade ago, the financial company MF Global almost went bankrupt.
Even more, the damage has been done to cryptocurrencies, which have gone down this year along with the rest of the U.S. stock market.