Sam Bankman-Fried, 30, has been a star in the crypto sky for years. But the multi-billionaire’s flight ended abruptly on Tuesday. His wealth evaporated in almost a day. Bankman-Fried lost nearly $15 billion on crypto exchange FTX, according to the Bloomberg Billionaires Index. The index maintains a daily updated ranking of the richest people in the world.
FTX, the world’s fourth largest crypto exchange, is facing major liquidity problems. Falling investor confidence has exacerbated the problems in recent days.
«All assets are covered 1 to 1»
One after another, they pulled their money from the platform and brought it to a safe place. This plunged FTX and its founder and CEO, Sam Bankman-Fried, into ever deeper misery and slammed the entire crypto industry on Tuesday. Bitcoin, the single most important cryptocurrency, temporarily dropped more than 17 percent to $17,744 on Tuesday – the lowest in two years.
For the crypto market to stabilize, FTX had to be finally bailed out by the largest crypto exchange Binance. Bankman Frieds lost most of his $16 billion fortune. Bankman-Fried tried to calm investors Tuesday evening. “All assets are covered 1 to 1,” he said on Twitter.
From the savior to the needy
Bankman-Frieds founded FTX three and a half years ago. In the summer, the young American had declared himself the savior of the industry and bailed out the lender for their digital currency BlockFi, for example. Bankman-Fried had less success in his bailout attempt at failed crypto bank Voyager Digital. Now he needed help.
The planned FTX acquisition by Binance failed to really calm the markets. Bitocin rallied to just $18,313 on Wednesday morning and then dropped back to $17,724 at 10:50 am.
“The announcement of the spectacular takeover has now triggered new concerns about massive turbulence,” writes analyst Timo Emden of the events, adding that “ongoing tensions in the industry clearly do not end at larger addresses.” This causes investors to react “highly allergic”.
Inheritance may still fail
Things aren’t looking so bleak at online bank Swissquote. Analyst Ipek Ozkardeskaya believes the “issue” with FTX has shaken confidence again and triggered an industry-wide sell-off. However, the “contagion risk” from the confusion surrounding FTX remains limited. The sector has already overcome previous and similar crises.
Many observers warn that the takeover could still fail. The market said that as things develop, it is entirely possible for Binance to step back. (smt/SDA)