On November 2, 2022, the image of Sam Bankman-Fried as an eccentric financial savant, along with his $32 billion crypto empire, began to crumble. A leaked balance sheet from Alameda Research, Bankman-Fried’s trading firm, revealed that the company, which was closely tied to his crypto-currency exchange, FTX, was built on a pile of illiquid tokens that no one wanted—“shitcoins,” in the parlance of the industry. Alameda and FTX had been widely believed to be making money hand over fist, with Bankman-Fried playing savior to distressed companies during the deepening crypto winter. Instead, they were broke, leveraged to the hilt.
Panicked customers rushed to withdraw their funds, forcing the company to admit that the money wasn’t all there. In one of the more dramatic turnabouts in recent corporate history, FTX went from industry giant to a bankrupt disgrace within a week, as the public learned that billions of dollars in FTX customer funds had been funneled to Alameda Research, which turned out to be less a trading firm than the owner’s personal piggy bank.
