Former FTX CEO Bankman-Fried Loses Entire Fortune of $16 Billion and Files for Bankruptcy

Earlier in the week, FTX announced that it had commenced voluntary bankruptcy proceedings to begin the review and monetization of assets after its competitor, cryptocurrency platform Binance, backed out of plans to acquire it. The company also informed that Bankman-Fried had stepped down as CEO.

The co-founder and former CEO of the FTX cryptocurrency exchange, Sam Bankman-Fried, lost his entire fortune of $16 billion in a few days, marking one of the largest wealth losses in history, Bloomberg reported on Saturday.

At its peak, Bankman-Fried's fortune was estimated at $26 billion, and it still amounted to almost $16 billion at the start of the week, the report said. However, Bloomberg reported on Tuesday that the former FTX chief lost 94% of his fortune, which shrank to just under $1 billion.

According to the news agency, the Bloomberg Billionaires Index now estimates FTX’s business, of which Bankman-Fried owns about 70%, at $1 due to a potential trading halt.

Bloomberg also reported that FTX was hit by a mysterious outflow of about $662 million in tokens in the past 24 hours, which Ryne Miller, legal adviser to the company, described as "abnormalities with wallet movements."

Binance CEO Changpeng Zhao said earlier this week that FTX had contacted the cryptocurrency giant with a suggestion to acquire the exchange due to a significant liquidity crunch. According to Zhao, Binance had signed a non-binding letter of intent to acquire FTX and cover the liquidity shortage in order to protect users.

On Wednesday, Binance announced its withdrawal from the takeover deal. Following the announcement, the bitcoin exchange rate collapsed to $15,600, the lowest it has been since November 2020.

From a broader viewpoint: the fall of FTX could mark the end of cryptocurrency, according to one expert.

“The fall of FTX could be the moment that really kicks off the broader decline — maybe even demise — of cryptocurrency,” says James Royal, principal reporter at Bankrate. “The first thing traders need to do now is understand the legal duty that an exchange has to them, and whether their assets are held securely."

“With the exception of so-called stablecoins, crypto prices are supported entirely by belief in their future, not by any fundamental underpinning such as assets or cash flow,” Royal added. “Crypto has been seen as a lottery ticket, and hypesters have been pumping crypto for years. Unfortunately, it usually takes massive losses for the scales to fall from traders’ eyes.”