FTX founder and CEO Sam Bankman-Fried (SBF) woke up on November 7, 2022, with a net worth of over $15 billion. Within 48 hours, that fortune shrunk by nearly 94% to about $990 million. So how did SBF, one of the cryptocurrency industry’s most famous faces, lose $14.6 billion overnight? Naturally, it all started on Twitter.
Binance’s Changpeng Zhao offered to buy FTX from Sam Bankman-Fried.
The debacle started when Binance CEO Changpeng Zhao (CZ) announced the company would sell its FTT holdings, FTX’s native token. The decision came when leaked documents revealed FTX’s sister company, Alameda Research, held a significant amount of FTT. CZ took to Twitter to share his thoughts on the matter, and it all went downhill from there. And then, in the early hours of November 8, FTX halted withdrawals from the platform.
Later that morning, Sam Bankman-Fried announced he had struck a deal to sell FTX to CZ, confirming near-insolvency rumors. Zhao had signed a non-binding letter of intent to buy the competitor exchange. In the hours following the deal’s announcement, FTT had plummeted from $19.33 to just over $3.14. However, it has since recovered a bit to about $4.18, which is still a 72% drop in just hours.
What happened to SBF’s fortune?
CoinDesk reports that SBF is no longer a member of Bloomberg’s billionaires index. In less than 48 hours, the young crypto mogul lost 94% of his fortune. CZ took the opportunity to share some advice regarding the situation. “Never use a token you created as collateral,” CZ tweeted. “Don’t borrow if you run a crypto business. Don’t use capital ‘efficiently,’” and, most importantly, “Have a large reserve.”
How has the fall of SBF affected the crypto market?
The crypto market did what the crypto market does. As usual, when there’s a high-profile explosion in the crypto world, prices drop. At publication, according to CoinMarketCap, Bitcoin is down nearly 14% in the last 24 hours. The world’s first cryptocurrency has found a new low at about $17,200. Ethereum is also bleeding out, dropping nearly 23% in the last day. At publication, ETH hovers around $1,181.