How did Sam Bankman-Fried go from being worth billions of dollars to be put under arrest? His story is truly perfect for a Hollywood movie.
From richest man in the cryptocurrency sector to facing 115 years in prison, Sam Bankman-Fried (or SBM) is among the most successful fraudsters of all time. At his peak, SBM’s net worth was over $26 billion, made entirely out of his cryptocurrency business.
Given the volatility of the market, it is no surprise that SBM lost literally his entire fortune overnight. But what is his net worth today? And how did it come to be this way?
SBM became so successful thanks to FTX, a cryptocurrency derivatives exchange founded in 2019. FTX’s goal was to facilitate transactions between crypto owners, and by 2021 it was already evaluated at $18 billion.
Previously, however, SBM founded another trading-related venture: Alameda Research. With Alameda Research, SBM was moving millions of dollars everyday, taking advantage of the higher price of Bitcoin in Japan compared to the United States.
In 2022, at the age of just 30 years old, SBM was worth billions of dollars. He owned properties all around the world, from the Bahamas to Hong Kong. He donated millions of dollars to the Democratic elections campaign, and even took part in Elon Musk’s acquisition of Twitter.
All of that, however, would come to a grinding halt in November 2022, when FTX could no longer hide their skeletons in the closet.
FTX bankruptcy and legal charges
In September 2022, a Bloomberg article came out questioning the wellbeing of FTX. Apparently, Alameda Research was acting as a market maker for FTX, which in turn was struggling to raise money.
A couple of months later, the truth came out. FTX was running out of money to pay investors, and Bankman-Fried had allegedly known about it for years. Since 2021, he had been funneling billions of investors’ money from FTX to Alameda Research, of which he owned 90% of the shares.
By November 2022, FTX had moved $10 billion to Alameda Research without notifying investors. At that point, FTX had no choice but to file for bankruptcy, while Sam Bankman-Fried fled to the Bahamas.
However, his run would not last long. After barely a month, the Royal Bahamas Police Force raided Bankman-Fried’s complex on the archipelago and put him under arrest. 10 days later, he was extradited to the United States.
He is now charged with eight counts which he was sentenced to serve consecutively if found guilty. Among the others, the main charge is fraud.
He faces a maximum of 115 years in prison, possibly even more after new charges were found on February 23rd 2023 concerning his political lobbying.
According to Forbes, Sam Bankman-Fried’s current net worth is $4 million, barely a fraction of what it was just six months ago. In prison, however, those $4 million will hardly be of any use for him…
