What is Sam Bankman-background, Fried’s and how did he lose so much money so quickly?

Sam Bankman-Fried, who is he?
Born in 1992 into an upper-middle-class household, Bankman-Fried graduated from the Massachusetts Institute of Technology in 2014 with a degree in physics and a minor in mathematics. He worked with a Wall Street stockbroker before graduation, and he continued this profession afterward, trading exchange-traded funds and become deeply involved in stocks. He established the trading company Alameda Research in 2017 after becoming intrigued by the soaring price of Bitcoin and the potential financial benefits. In April 2019, Bankman-Fried created bitcoin exchange FTX after going to a cryptocurrency conference in 2018.

He claimed to be a supporter of effective altruism and to have voiced a wish to give the majority of his riches to charity. By September 2022, a fund he established for charitable purposes had given $160 million to good causes, and others working for him wanted to donate $5 billion to Elon Musk’s acquisition of Twitter.

The primary source of Bankman-outrageous Fried’s riches was FTX, which at its peak had about $16 billion in customer assets and had a value of $32 billion in early 2022. But it would all come tumbling down at an unprecedented velocity.

Crashing cryptocurrencies, the FTX, and the fastest-ever wealth loss

Bankman-Fried made a concentrated attempt to portray FTX as having excellent financials, but the reality was far different. Cryptocurrency values were far below expectations and collapsing, leaving enterprises in a precarious position. Bankman-Fried said it was okay to distribute hundreds of millions of dollars because he allegedly had $2 billion in reserve funds on hand to weather the crypto storm.

But it quickly emerged from a CoinDesk post (and a later tweet from Bankman-Fried himself) that the majority of Alameda Research’s assets were in FTT, a token coin produced by FTX. Due to an earlier stock sale in FTX, Binance acquired a sizable portion of the currency, and given the limited trading volume of FTT, a significant sell-off might be disastrous.

These things happened after Binance CEO Changpeng Zhao said in November 2022 that they would be selling their remaining FTT owing to allegations that FTX were exploiting customer deposits as trading loans. Cryptocurrency prices fell as a result of disputes between Zhao and Bankman-Fried and the sell-volatility, off’s and FTX had a liquidity crisis. After more allegations that FTX had mishandled customers’ monies, Binance declared that they would be purchasing out FTX but later withdrew their offer. A day later, FTX was declared insolvent.

Currently, Bankman-Fried is the subject of a thorough investigation, which may result in criminal accusations of fraud, for using customer deposits to cover decreasing cryptocurrency values. As FTX was not registered in the US, it may not theoretically fall under US jurisdiction. Additionally, and perhaps even more brutally, the prosecution must show that there was an intention to defraud investors. Though it is unclear if this would be pursued, legal experts anticipate the defense to contend that Bankman-Fried was merely incompetent and not a criminal fraudster.