It's looking like Sam Bankman-Fried will be joining luminaries like Elizabeth Holmes and Adam Neumann as tech visionaries who were lauded by the press but whose visions eventually crumbled. His crypto empire which includes FTX and Alameda Research seems to be on the brink of collapse with estimates that they are about $12 billion in the hole.
According to initial reports, Binance had agreed to buy out FTX in order to assume the company's debts. However, Binance pulled out of the deal once it got a full look at FTX's books and over concerns about regulatory and legal risks.
It's a steep fall for Bankman and for FTX which had been valued at $32 billion just a few months ago and looked to be one of the responsible players in the crypto industry. The company had been forecasting $144 million in operating income this year and $1.1 billion in revenue.
At the moment, FTX is unable to meet customers' requests for withdrawal which technically makes it insolvent. Based on the nature of bank runs, it's only logical that other customers will also want their money back which will only add to the pressure for FTX. Additionally, it's looking like some of FTX's customer funds were used by the company for 'staking' and investing in other projects. And, the value of these coins have plummeted.
The downfall of FTX was being rumored. One inkling was that after Bankman-Fried had been the largest donor on the Democratic side in the 2020 election and the early goings of the 2022 primary races, he dramatically pulled back on spending in the critical months before the election.
The next domino to fall was a selloff in FTX's native coin - FTT - which dropped after Binance sold its holdings in the coin. According to reports, tensions had simmered between the two most prominent crypto billionaires and came to a head in recent weeks. The coin has lost more than 80% of its value and as other crypto collapses, seems destined to head for 0.
The turmoil also caused knock-on effects in other cryptocurrencies as bitcoin fell below $16,000 and Ethereum flirts with the $1,000 level.