As the “boy wonder of crypto”, Sam Bankman-Fried “got richer faster than almost anyone in history, amassing an estimated $26bn in personal wealth”, appearing on countless magazine covers, and rubbing shoulders with the rich and powerful, says the BBC.
SBF, as he is known, was never shy about it: he wanted to get rich. “An overachieving child born to two overachieving parents,” SBF studied at MIT and fell under the spell of “effective altruism” – the idea that making as much money as you can, so you can give it away, is the best way to be charitable. At the age of 25, he founded Alameda Research to exploit arbitrage opportunities in cryptocurrencies. In 2019, he founded FTX, an exchange for digital tokens. Within months, the volume of daily trading hit $300m.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Just months into its existence, Alameda was borrowing customers’ deposits for its own purposes. To prove fraud, the prosecution often needed simply to use SBF’s own words against him. At one point his lawyer asked if a document was being offered for its truth. “Your honour, it’s the defendant’s own statements... No, it’s not being offered for its truth,” the prosecutor said. SBF faces further charges in a trial scheduled for March and a maximum sentence of 110 years.
FTX’s collapse has brought such truths to light. The hope is that legislators and regulators will now step in. In the meantime, just three letters might serve to warn people away: FTX.
This article was first published in MoneyWeek's magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.
Related articles
-
The war dividend – how to invest in defence stocks as the world arms upWestern governments are back on a war footing. Investors should be prepared, too, says Jamie Ward
-
Literacy Capital: A trust where great returns fund a good causeThere’s plenty to like about specialist private-equity trust Literacy Capital, says Max King
-
An AI bust could hit private credit – could it cause a financial crisis?Opinion Private credit is playing a key role in funding data centres. It may be the first to take the hit if the AI boom ends, says Cris Sholto Heaton
-
8 of the best ski chalets for sale nowThe best ski chalets on the market – from a traditional Alpine-style chalet in Switzerland to an award-winning Modernist building in Japan’s exclusive ski areas
-
Did COP30 achieve anything to tackle climate change?The COP30 summit was a failure. But the world is going green regardless, says Simon Wilson
-
Who is Christopher Harborne, crypto billionaire and Reform UK’s new mega-donor?Christopher Harborne came into the spotlight when it emerged he had given £9 million to Nigel Farage's Reform UK. How did he make his millions?
-
The best Christmas gifts for your loved onesWe round up the best Christmas gifts with a touch of luxury to delight, surprise and amaze family and friends this festive season
-
Leading European companies offer long-term growth prospectsOpinion Alexander Darwall, lead portfolio manager, European Opportunities Trust, picks three European companies where he'd put his money
