There are numerous ‘from grace to grass’ stories in the crypto world, but only a few come close to Sam Bankman-Fried. The former crypto investor gained so much prestige, fame, and money from cryptocurrency investments that he went from being an absolute nobody to being a point of reference for many worth $26.5 billion at his peak. However, a few wrong (and illegal) moves brought the former crypto giant down to his knees, axing his net worth to $0 in the process.
SBF was a cryptocurrency whiz kid, entrepreneur, and prominent investor at the peak of his career. He founded several firms, including the FTX cryptocurrency exchange, which became bankrupt just before its founder met his Waterloo. Regardless of his bitter end, Sam Bankman-Fried has had better days in his financial career. Once before, his net worth ranked him the 41st richest American in the Forbes 400.
One starts to wonder how such a promising young man blew this golden chance! So, let’s find out what Sam Bankman-Fried’s life looked like before his entrance into the crypto world. We will also reveal how rich the American became at his peak and what befell him after he saw red in the face of the American law.
SBF’s Early Life
Samuel Bankman-Fried (@sbf_ftx) was born on March 5, 1992, to Barbara Fried and Joseph Bankman. He was born and grew up in Stanford, California, where his parents worked as professors at Stanford Law School. Since they were both educational giants, they ensured that their children got the best education available as well.
So, Bankman-Fried attended Crystal Springs Uplands School in Hillsborough, California. At high school, SBF was a math whiz and was chosen to represent his class at Canada/U.S.A. Mathcamp—a summer program for mathematically talented high school students. In 2014, SBF graduated from the Massachusetts Institute of Technology with a degree in physics and a minor in mathematics.
Bankman-Fried’s love for figures influenced his decision to intern for New York-based proprietary trading firm Jane Street Capital. He eventually returned as a full-time employee after his graduation from MIT. These experiences and more were part of the triggers that pushed him to create his own trading firms, companies, and, ultimately, the crypto exchange FTX.
What is Sam Bankman-Fried’s Net Worth?
According to Forbes’ real-time wealth rankings, Sam Bankman-Fried currently has $0 in his net worth. This is because the Californian, Bahamas, and United States securities in general found him guilty of numerous charges centered around fraud and money laundering. However, Sam Bankman-Fried’s net worth peaked at about $26.5 billion before his arrest sometime in 2021.
Much of SBF’s wealth at that time was tied to the value of FTX and its FTT Cryptocurrency token. So, when the asset’s value began to nosedive in 2022, his net worth followed suit, dropping to about $16 billion. Little did he know that the drop was only the beginning of his troubles as that $16 billion soon became $0 in a matter of months!
At the time of writing, SBF and his well-wishers still refer to 2021 and early 2022 as their glory days because things took a drastic turn afterward. That brings us to the real deal: What exactly happened that took SBF from billionaire status to become an absolute failure? Is there room for a financial comeback for the crypto guru? Let’s find out!
How Did Sam Bankman-Fried Make His Money?
Specifically, Sam Bankman-Fried’s journey to financial breakthrough began in 2017. He left Jane Street that year and co-founded Alameda Research, a quantitative trading crypto hedge fund that trades cryptos daily. The firm’s first headquarters was a two-bedroom Airbnb in North Berkeley, California. Although it was indeed a small firm, Alameda Research made millions of dollars daily by actively trading cryptocurrencies among various international markets.
Soon, he made the master move! SBF combined his knowledge about crypto and founded the cryptocurrency exchange FTX in April 2019, which he launched the following month. Gary Wang, another prominent figure in the crypto space, co-founded the exchange platform with Bankman-Fried, ensuring its smooth running. FTX created the FTT token, which pumped massively, earning Bankman-Fried thousands of dollars per day.
How Did Sam Bankman-Fried Lose All His Money?
FTX and Bankman-Fried were booming until November 2022 when Binance literally ruined them. Binance CEO, Changpeng Zhao, revealed on X (formerly Twitter) that his firm will sell all its FTT holdings. Binance sold about $529 million worth of FT tokens, which led to a massive drop in the price of FTT tokens as thousands of customers withdrew their FTT holdings as soon as possible.
In a matter of days, Alameda Research, FTX, and several other legal entities declared bankruptcy. This dealt a huge blow to Bankman-Fried’s net worth, reducing it to below $2 billion, but that was only the beginning of his end. SBF resigned as the CEO of FTX on November 11, 2022, and was immediately replaced by John J. Ray III.
On November 12, 2022, Bankman-Fried was interviewed by the Royal Bahamas Police Force (RBPF) over his role in FTX’s bankruptcy and other fraudulent activities. Hours before the arrest, the Southern District of New York had charged SBF with wire fraud, securities fraud, and money laundering. But since he was in the Bahamas at the time, the RBPF was inclined to place the arrest and extradite him to the U.S. to face trial.
He was detained at Fox Hill Prison for ten days before consenting to his extradition from the Bahamas to the United States to face charges. Back home in the U.S., his properties were seized, and he was “forced” to stay at his parents’ home in California. On January 3, 2023, SBF pled “not guilty” to the charges advanced by the United States prosecutors.
After the first court hearing in January, what followed was a series of back-and-forth accusations by the U.S. agencies. Sam Bankman-Fried was faced with fresh charges, some of which were backed with very concrete evidence that took him by surprise. An example is the one that came up in August, where SBF was accused of using $100 million in stolen FTX customer’s funds towards 2022 U.S. elections campaign contributions.
What Happened To Sam Bankman-Fried At The U.S. Court?
Samuel Bankman-Fried’s final trial began on October 3, 2023, at the Manhattan Federal Court. He was mainly accused of stealing funds from FTX customers to fund other courses. Although his lawyer portrayed him as just a young, innocent man looking to make ends meet, the jury wouldn’t buy any of that. For me, SBF stood no chance, given the fact that over a dozen witnesses testified for the prosecution, stating facts backed by multiple pieces of evidence.
The case went on for about two days and heard the testimony of three FTX executives, Gary Wang, and Caroline Ellison. By the way, they all testified against Sam Bankman-Fried! In the end, SBF was found guilty of stealing billions of customers’ funds, securities fraud, and five more counts of fraud and conspiracy.
SBF could spend about 110 years in prison if given the maximum sentence. However, the court sentenced him to 25 years in prison and dismissed further charges that were supposed to be heard in March 2024. However, on April 11, 2024, Sam Bankman-Fried appealed his conviction and the 25-year sentence. No news has been heard about the progress of his appeal so far, but one thing is certain: Samuel Bankman-Fried is never going to be that rich crypto “poster boy” ever again.
