Sam Bankman-Fried is a software engineer and entrepreneur who founded the cryptocurrency derivatives exchange FTX. He is also a founding partner of Alameda Research, a quantitative trading firm. After the FTX drama of 2022, he .
Sam Bankman-Fried (SBF) was born in 1992 in an upper-middle-class Jewish family. After completing high school in California, he attended the prestigious Massachusetts Institute of Technology (MIT) from 2010 to 2014 graduating with a degree in physics. During the last year of his degree, he started working at a quantitative trading firm named Jane Street Capital.
However, after working for 3 years he left Jane Street Capital to found Alameda Research in 2017. During this time he found a hack to make a million dollars per day as the price of Bitcoin was $10,000 on the US exchange and $11,000 on the Japanese exchange. He did not miss this opportunity and used it to buy $10 million worth of Bitcoin from the US exchange to sell on the Japanese exchange. With this simple trick, he used to make a million dollars each day.
Sam Bankman-Fried and FTX
In 2018, SBF moved to Hong Kong and a year later he founded Future Exchange (FTX), a crypto derivative exchange. In just a period of 3 years, FTX grew to a valuation of 32.5 billion dollars. SBF was inspired to create an exchange that was tailored to the needs of professional traders, which is why he built a platform that was both efficient and user-friendly.
The exchange was initially launched as a platform for trading Bitcoin and Ethereum futures and leveraging tokens but later expanded to include other cryptocurrencies as well. Bankman Fried was credited with FTX’s success, citing his commitment to innovation and providing users with the best possible experience.
In 2021, SBF moved the FTX headquarters from Hong Kong to the Bahamas because of several reason, one being that the Bahamas was the world’s first country to adopt a central bank digital currency. It also has better regulations, a lockdown-free environment, and security.
In 2022, however, it was a whole other story. The cryptocurrency empire that SBF built in just a few years has collapsed completely. The collapse of FTX has sent shock waves to the whole crypto community. On Nov 6, Binance announced that it will sell all its holdings of FTT tokens, which is a cryptocurrency token of FTX.
As a result, the price of FTT tokens crashed rapidly and all traders went out to pull all their savings from FTX considering this is going to be yet another failed crypto company. Shortly after, several traders pulled out their company in fear of another failed crypto company. The request for the withdrawals was estimated to be about $6 billion in just three days.
FTX was unable to process all these withdrawal requests which meant it didn’t have the money to do it. This type of situation is known as Liquidity Crunch. Currently, FTX is now in talks with Tron which is another Blockchain platform to swap FTT tokens to other crypto wallets.
Sam Bankman-Fried, himself, is on the run and is said to be in hiding in the Bahamas. He has been entertaining interviews on Twitter defending his position but the entire crypto community is highly skeptical of him.