Sam Bankman-Fried’s philanthropic ambitions end in a quandary: The case of the FTX Future Fund

Sam Bankman-Fried woke up Monday as his empire was starting to fall apart. By Friday, his fortune was completely wiped out.

In the span of just three years, Sam Bankman-Fried built FTX into a massive crypto exchange backed by marquee investors and valued at $32 billion. It took just days for all of that to fall apart.

Bankman-Fried has tried to make as much money as possible in order to give away. But the fate of his philanthropic endeavors is now in doubt.

The entire staff of the FTX Future Fund quit publicly Thursday, acknowledging they had committed $160 million in grants. In a statement, the five-person team wrote that they “have fundamental questions about the legitimacy and integrity of the business operations that were funding the FTX Foundation and the Future Fund.”

Neal won’t be taking over. saying that he is “unable to serve in that position for reasons having nothing to do with FTX, Inc. or its former CEO.”

Blockfi’s Theorem: How the Bitcoin Price fell apart and the Wall-to-Block Exchange Effort Embedded

The negative ripple effect across the industry started last night with Blockfi, another crypto services firm, freezing customer withdrawals as a result of the FTX problems. After the announcement, the price of Bitcoin dropped sharply before recovering slightly and remains under the $17,000 mark.

Bankman-Fried said on Friday he was trying to figure out what had happened at FTX. He was shocked to see the way things fell apart this week. I will write a complete post soon on the play by play.

Bahamas-based FTX filed for bankruptcy on Friday after a rush of customer withdrawals earlier this week. A rescue deal with rival exchange Binance fell through, precipitating crypto’s highest-profile collapse in recent years.

Dennis Kelleher said in a statement on Monday that FTX had a plan to use the knowledge and influence of the Commodities Futures Trading Commission and other places to move their agenda.

There is an update November 11th at 10:55AM. Added bankruptcy filing, tweets from Sam Bankman-Fried, and noted that Sir Lewis Hamilton’s F1 car will not bear FTX branding at this weekend’s upcoming race.

The investigation of FTX.com’s financial structure and money-laundering operations is ongoing at the S&P20 investigation, according to information obtained by Reuters

They said a large amount of the total has vanished. One source put the missing amount at about $1.7 billion. The other claimed the gap was between a $1 billion and 2 billion.

Two people with knowledge of FTX’s finances said Bankman-Fried met with several executives in the capital of the Bahamas to figure out how much funding he needed to make up the shortfall.

The documents showed that between $1 billion and $2 billion of these funds were not accounted for among Alameda’s assets, the sources said. The sources said they don’t know where the money was moved since the spreadsheets didn’t indicate it.

They said that the backdoor allowed Bankman-Fried to make changes to the company’s financial records without anyone knowing. This set-up meant that the movement of the $10 billion in funds to Alameda did not trigger internal compliance or accounting red flags at FTX, they said.

The U.S. Securities and Exchange Commission is investigating FTX.com’s handling of customer funds, as well as its crypto-lending activities, a source with knowledge of the inquiry told Reuters on Wednesday. The Commodity futures trading commission is investigating, as is the Department of Justice.

The crisis has sent reverberations through the crypto world, with the price of major coins plummeting. And FTX’s collapse is drawing comparisons to earlier major business meltdowns.

One venture capital fund wrote down investments in FTX worth over $200 million. BlockFi halted all client withdrawals Friday as FTX filed for bankruptcy protection. The weekend saw increases in withdrawals at the Singapore-based exchange but some of the action could be related to raw nerves from FTX.

Sequoia Capital: Investing in the World’s First Twelfth Millionaire, Not in the First Tilted

Shortly after the SDNY confirmed his arrest, the Securities and Exchange Commission said it had authorized separate charges relating to Bankman-Fried’s “violations of securities laws,” which will be filed publicly on Tuesday.

“People feel duped,” Brian Armstrong, the CEO of rival crypto exchange Coinbase, told CNN in a phone interview on Friday. On the surface, FTX was getting lots of attention. But as people looked into it, the fundamentals were not there.”

Sequoia Capital, which invested in Apple, Cisco, Google, Airbnb and YouTube, described their meeting with Bankman-Fried as likely “talking to the world’s first trillionaire.” Several of Sequoia’s partners became excited about Bankman-Fried at a meeting. After several more meetings, Sequoia decided to invest in the company.

I don’t know how to do that. Adam Fisher, a business journalist who wrote a profile of Bankman- Fried for the firm, referred to the firm as SBF is a winner. The article, published in late September, was removed from Sequoia’s website.

An Overview of Bankman-Fried’s Influence and the Rise and Fall of FTX, the Ponzi Scheme Masterminds

The Ontario Teachers’ Pension Fund said that not all of the investments in this early-stage asset class perform to expectations.

When Bankman-Fried bought up the assets of bankrupt crypto firm Voyager Digital for $1.4 billion this summer, it brought a sense of relief to Voyager account holders, whose assets has been frozen since its own failure. The rescue is in serious doubt at the moment.

His influence was starting to build up in political and popular culture. FTX bought prominent sports sponsorships with Formula Racing and bought the naming rights to an arena in Miami. He pledged to donate $1 billion toward Democrats this election cycle — his actual donations were in the tens of millions — and prominent politicians like Bill Clinton were invited to speak at FTX conferences. Tom Brady was an investor in FTX.

During the 2008 financial crisis, top regulators told CNN that there were similarities between the rise and fall of Bankman- Fried and FTX and that of notorious Ponzi scheme masterminds.

Bair writes that 30-year-old Bankman-Fried was able to use his connections to lure sophisticated investors and regulators into missing red flags.

He was known as a wizard on Wall Street. He was an advisor to the Securities and Exchange Commission, as well as managing money for the rich and famous.

You get this herd mentality where if all your peers and marquee names are investing, you have to as well. The credibility with the Washington policymakers is enhanced by that. Bair is a member of the board of directors at Paxos, a company that is engaged in building a network of distributed ledgers.

Sam Bankman-Fried, founder of failed crypto exchange FTX, is not worried about the craze that has embarrassed the entire financial system

After an elaborate scheme that involved repaying existing clients with new client deposits, the track record of the Ponzi scheme has been made accessible to many.

The good news is the former FDIC chair is not worried about the FTX implosion threatening the entire financial system the way Lehman Brothers did in 2008. The economy and financial market are still small for CRYPTO.

Sam Bankman-Fried, the founder of failed crypto exchange FTX, was arrested in the Bahamas on Monday after US prosecutors filed criminal charges against him, according to a statement from the government of the Bahamas.

“You must answer for the failure of both entities that was caused, at least in part, by the clear misuse of client funds and wiped out billions of dollars owed to over a million creditors,” the senators wrote.

The chair of the Senate Banking Committee threatened Bankman-Fried with a subpoena if he didn’t agree to testify by the end of Thursday. He has not publicly agreed to testify before Brown’s Senate panel as of publication.

There are still some questions regarding how client funds were misappropriated, how clients were blocked from withdrawing their own money, and how you orchestrated a cover up.

Separately, Sens. Elizabeth Warren of Massachusetts and Tina Smith of Minnesota, both Democrats, sent letters to three regulators – the Federal Reserve, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency – asking them to assess the traditional banking system’s exposure to turmoil in the crypto space, a largely unregulated, parallel financial system.

“Crypto firms may have closer ties to the banking system than previously understood,” Warren and Smith wrote. “Banks’ relationships with crypto firms raise questions about the safety and soundness of our banking system and highlight potential loopholes that crypto firms may try to exploit to gain further access.”

Samuel Bankman-Fried, the Collapse of FTX and its Sister Trading Firm Alameda, As Revealed by Waters

“Based on your role as CEO and your media interviews over the past few weeks, it’s clear to us that the information you have thus far is sufficient for testimony,” Waters replied to Bankman-Fried earlier this week.

The Southern District of New York, which is investigating Bankman-Fried and the collapse of FTX and its sister trading firm Alameda, confirmed his arrest on Twitter.

US Attorney Damian Williams stated that the Jamaican authorities arrested Samuel Bankman-Fried because of a sealed indictment. We are going to unseal the indictment in the morning and have more to say after that.

If the charges are deemed to be serious enough to lead to imprisonment in both nations, US prosecutors can return defendants to America.

“I didn’t knowingly commit fraud,” he told the BBC over the weekend. I didn’t want this to happen. I was not quite as competent as I thought I was.

“While I am disappointed that we will not be able to hear from Mr. Bankman-Fried tomorrow, we remain committed to getting to the bottom of what happened,” Waters said in a statement Monday night.

While the probe isn’t completed, Ray said, FTX’s collapse appears to stem from the concentration of power “in the hands of a very small group of grossly inexperienced and unsophisticated individuals” who failed to implement virtually any corporate controls.

Ray also states as fact that “customer assets from FTX.com were commingled with assets from the Alameda trading platform.” FTX and Alameda were different entities, that is how investigators look at that issue.

“There was no person who was chiefly in charge of positional risk of customers on FTX,” Bankman-Fried told DealBook. “And that feels pretty embarrassing in retrospect.”

Bankman-Fried did not know of a back door. “I don’t even know how to code,” he told cryptocurrency vlogger Tiffany Fong in an interview last month.

Comments on Bankman-Fried’s “Charm campaign against the collapse of FTX” into a U.S. Bankruptcy

The arrest was made at the request of the U.S. government, based on a sealed indictment filed by the Southern District of New York, U.S. Attorney Damian Williams said in a tweet also on Monday night.

In a statement, the prime minister of the Bahamas stressed the country is cooperating with law enforcement and regulators in the United States, but its own “regulatory and criminal investigations into the collapse of FTX continue.”

Bankman-Fried resigned hours before the bankruptcy filing and spent the last month on a charm campaign portraying himself as a guy who let things slide and didn’t commit fraud in a variety of media interviews.

As of late Monday night, the committee still had a notice of the hearing posted that listed Bankman-Fried as a witness and also included the written testimony of the hearing’s other witness, FTX’s CEO John Ray.