The trial of Sam Bankman-Fried, the disgraced founder of FTX, is set to begin soon, and if convicted, he could join the ranks of infamous hucksters like Charles Ponzi and Bernie Madoff. However, what sets Bankman-Fried apart is the massive scale of his operation. FTX, the crypto exchange he co-founded, reached a peak valuation of $32 billion, and his personal net worth was estimated at $16 billion. These staggering figures make his upcoming trial one of the most closely watched in the history of financial crime. Bankman-Fried, who still maintains his innocence, had a prominent background, with parents who were both professors at Stanford Law School. He attended MIT and worked at Wall Street quant firm Jane Street after graduation, all before founding Alameda Research and later FTX.
Bankman-Fried’s story began at Stanford University in California, where he was born to parents who were professors at the university’s law school. He then attended MIT, majoring in physics and minoring in math. While he excelled academically, he was more interested in spending time with his friends in the Epsilon Theta fraternity. After graduation, he secured a job at Jane Street, a Wall Street quant firm, where he became interested in the effective altruism movement. In 2017, he approached Gary Wang to help create crypto trading firm Alameda Research, and eventually founded FTX in 2019. FTX became known for its advertising campaigns and partnerships with major sports organizations.
However, the success of FTX came crashing down in November 2022. A report by CoinDesk revealed the close connection between FTX and Alameda Research, raising concerns about the viability of Alameda’s biggest asset, FTT cryptocurrency. Binance CEO Changpeng Zhao announced that Binance would unload all of its FTT holdings, amounting to $580 million. FTX’s attempt to sell to Binance fell through, leaving the company with a $6 billion hole on its balance sheet. Investigations were launched into FTX’s handling of customer funds, and the company eventually filed for Chapter 11 bankruptcy. Bankman-Fried stepped down as CEO and was replaced by a restructuring lawyer. He later admitted some responsibility for FTX’s collapse and accepted the invitation to testify before Congress. However, on the day before his scheduled testimony, he was arrested in the Bahamas and charged with wire fraud and conspiracy.