Takeovers, trading, and tokens: SBF’s crypto empire unraveled
Voyager Digital has branded FTX founder Sam Bankman-Fried’s (SBF) attempt to buy assets belonging to the troubled crypto lender as “a low-ball bid,” that could “create chaos” in the firm’s ongoing bankruptcy proceedings.
Alameda Research, founded and owned by Bankman-Fried, was one of Voyager Digital’s biggest creditors when it filed for bankruptcy. On June 17, 2022, Voyager announced that it took out a term sheet with $200 million in cash and 15,000 BTC in credit from the firm.
Voyager recently announced that it was filing for Chapter 11 bankruptcy with SBF reportedly acquiring 11.56% of the outstanding shares in Voyager Digital shortly before the filing.
According to Bloomberg, SBF put forward a restructuring deal that would have seen Alameda Research buy up Voyager’s digital assets and digital asset loans in cash at market value. The offer didn’t include loans to Three Arrows Capital.
FTX would then give Voyager customers the option to receive their share of claims by opening a new account with the exchange. However, Voyager’s legal team shot down the proposal, calling it “nothing more than a liquidation of cryptocurrency on a basis that advantages AlamedaFTX.”
“It’s a low-ball bid dressed up as a white knight rescue,” they added in a court filing.
Voyager says it would be open to a more serious offer, but as of now believes SBF’s efforts to be nothing more than a publicity stunt for his own forms.”
Indeed, if SBF was to return with what Voyager considers a “serious offer,” it could see the curly-haired wunderkind adding to an already impressive crypto empire that has seen him become one of the richest people in the digital asset industry.
Forbes lists SBF at number 60 in its billionaire rich list, while Bloomberg has him at 149 on its own global leaderboard. However, because the vast majority of his investments are private, it’s difficult to calculate SBF’s net worth, with best guesses ranging from Bloomberg’s $12 billion to Forbes’ more substantial $21 billion.
Regardless of exactly how much money he has, what we do know is that the vast majority of his wealth comes from FTX. Bloomberg estimates he owns 54% of FTX which raised its last financing at a $32 billion valuation. He also owns 7% of Robinhood, 70% of FTX.US, and the vast majority of Alameda Research.
Despite his high profile, however, there are few tabulations of his smaller investments. As SBF weaves a web of influence throughout the crypto industry, it’s becoming increasingly important to understand where he wields his power.
Below is a non-exhaustive list of Sam Bankman-Fried’s most significant investments.
SBF’s crypto empire began with Alameda Research
The bedrock of SBF’s crypto empire is Alameda Research, the quantitative digital asset trading firm he founded in October 2017. It also provides venture capital and donations.
Last year, it was revealed that Alameda was one of two firms — the other being Cumberland Global — that received nearly two-thirds of all Tether minted across multiple years.
Read more: SCOOP: Tether minted most USDT to just 2 firms — Alameda and Cumberland
Early career and Futures Trading Exchange (FTX)
After graduating from MIT with a degree in physics, SBF took a job at quant trading giant Jane Street. Next, he made a small fortune in 2017 by misleading Japanese banks about the nature of his business operations (hence the name “Alameda Research”) while arbitraging bitcoin’s fiat discrepancy between the US and Japan.
By 2019, SBF, alongside Gary Wang, decided to found their own Binance competitor and, importantly, sell an exchange token like Binance Coin. The initial seed round for the company raised $8 million. By July, their ICO roadshow for FTX Token (FTT) was underway.
In 2021, FTX raised a $900 million Series B at an $18 billion valuation and quickly followed this with a move from Hong Kong to the Bahamas. This was likely due to the Chinese government’s repeated crackdowns on digital asset activity.
Today, FTX is the cornerstone of SBF’s crypto empire, claiming to be the world’s second-largest spot and derivatives crypto exchange.
FTX.US
FTX launched its dedicated subsidiary for the US market in May 2019. CoinMarketCap trading data puts FTX US in 13th place among exchanges.
After snapping up a number of companies struggling due to the crypto market’s downturn, FTX US, alongside its parent firm, has recently set new fundraising targets, reported to be around $400 million.
Blockfolio
FTX acquired portfolio tracking app Blockfolio for approximately $150 million in August 2020. At the time, Blockfolio was the world’s most popular crypto mobile app. Since then, it’s integrated FTX’s branding and trade execution services.
Anchorage Digital
SBF’s crypto empire has two main access points to US dollar banking: Deltec Bank in the Bahamas (the Bahamian dollar is pegged 1:1 with USD), and Anchorage in the US.
Anchorage Digital closed a funding round that included Alameda Research in December 2021. It provides a digital asset platform for institutions and previously received a banking charter from the US Office of the Comptroller of the Currency.
Since then, Anchorage Digital signed a deal to provide custody services for iHeartMedia’s NFTs. It also added staking services for institutional investors and custody services for holders of Civic’s utility token.
Liquid and Quoine
In February 2022, Liquid announced an agreement to be acquired by FTX. At the time, it announced a discount in trading fees paid in QASH tokens, with plans to burn 50% of the tokens received through trading fees every week. FTX finalized its acquisition that year.
FTX’s deal with Liquid also included the acquisition of Japan-based Quoine Corporation. FTX had previously loaned Liquid $120 million in debt financing in the wake of a hack in which Liquid lost $90 million. SBF used this leverage to acquire both companies and management of their tokens: Liquid, Quoine, and QASH.
Solana (SOL) and Serum
In many ways, SBF’s crypto empire is built on Tether and Solana. FTX and Alameda Research tapped Solana (SOL) to build a Solana-based derivatives exchange called Serum in June 2020. Plans for Serum included support for cross-chain asset swaps. The current Serum ecosystem includes several on-chain exchanges, derivative markets, and liquidity aggregators.
Wormhole
FTX became part of the core layer for the Wormhole bridge. Solana initially planned for Wormhole to bridge Solana- and Ethereum-based assets. Wormhole evolved into a development platform for the xChain (“cross-chain”) exchange.
Jump Crypto helped bail out Wormhole within hours of an exploit in which an attacker minted more than $320 million in Wrapped Ether (WETH) tokens.
Jump Crypto is a subsidiary of the trading giant Jump, which is a competitor of Sam Bankman-Fried’s former employer, Jane Street.
After the hack, Wormhole launched an ICO to replenish its depleted funds.
FTX Ventures
In January 2022, FTX founded FTX Ventures. It’s current portfolio includes LayerZero, Delphia, NEAR Protocol, Metatheory, and Aptos Labs.
FTX, a16z, and Sequoia Capital led a $135 million funding round for LayerZero in March 2022. LayerZero aims to solve interoperability issues between blockchains. For example, its main platform improves interconnectivity between dApps on different blockchains.
LayerZero worked with DappRadar to launch a chain-agnostic staking token and also partnered with Holograph to create Holographic Omniverse NFTs. Christie’s recently launched a VC division and made LayerZero Labs one of its first investments.
Trading algorithm developer Delphia closed a funding round led by Multicoin, with FTX also joining the funding round, on June 8, 2022. Delphia’s algorithm uses data like consumer spending information, social media sentiment, and employment statistics as variables.
Ethereum rival NEAR Protocol raised $350 million in a funding round that included FTX Ventures in April 2022. FTX’s exchange added a spot market for the NEAR token soon afterward.
NEAR Protocol launched a stablecoin called USN that is supposedly soft-pegged to the US dollar. BitGo announced plans to add NEAR Protocol to its qualified custodian services.
FTX Ventures also participated in a $24 million Series A funding round for Web3 gaming company Metatheory. Metaverse founder Kevin Lin plans to develop its flagship project, the science fiction franchise DuskBreakers. DuskBreakers includes character NFTs and two minigames. The NFTs sold out in a week as part of a “play-to-mint” event that included DuskBreakers’ first minigame.
BlockFi
FTX.US signed a deal with BlockFi to extend a $400 million revolving line of credit with an option to acquire the lender for up to $240 million. BlockFi cited the collapse of Three Arrows Capital and the poor performance of Celsius Network as major reasons for the deal.
Read more: BlockFi customers concerned it may have lent too much bitcoin to 3AC
LedgerX
FTX.US announced that it was launching a stock derivative trading platform called FTX US Derivatives on May 19, 2022. It acquired LedgerX in August 2021 and the LedgerX.com domain now redirects to the FTX US Derivatives subdomain.
On July 21, 2022, it also announced the acquisition of brokerage firm Embed. The acquisition will help FTX US Derivatives with asset clearing and custody.
Magic Eden
Alameda invested in Solana-based NFT marketplace Magic Eden’s $2.5 million seed round in October last year. Magic Eden recently launched a gaming venture capital division. Its interest in Metaverse-based gaming already includes several games and DucksVegas’ NFTs.
Lido (LDO)
In March 2022, Ethereum 2 liquid staking provider Lido (LDO) raised $70 million in a funding round with participation from Alameda.
Since then, Lido has announced plans to add staked asset tokens to Lido integrations and provide risk monitoring for staking pools. It also launched staking on the Polkadot (DOT) platform and added stETH tokens to its Ethereum L2 staking platform.
Read more: Here’s why Ethereum 2 staking is risky and increases centralization
Celsius (CEL)
Alameda got caught up in the aftermath of the TerraUSD and LUNA meltdown when Celsius Network began aggressively paying back DeFi loans before filing for bankruptcy.
The company allegedly redeemed about 50,000 stETH for ETH, which could have affected the stETH/ETH peg and impact other entities’ holdings like Lido’s stETH and Celsius Network’s liquid ether. Celsius Network had only 27% of its ETH ready to sell, with most of the rest tied up in stETH or staked in ETH2. Staking ether in an ETH2 protocol locks it up for approximately one year.
Three Arrows Capital (3AC)
Three Arrows Capital (3AC) filed for Chapter 15 bankruptcy on July 2, 2022. According to Chinese journalist WuBlockchain, since then, numerous creditors have popped up, including Voyager and Celsius, both of which had loaned 3AC millions of dollars in digital assets.
Voyager loaned 15,250 BTC and 350 million USDC to 3AC. Celsius had made two loans, one just over 50.2 million USDC and the other about 25.1 million USDC.
3AC’s founders went into hiding since filing for bankruptcy. One 3AC lawyer gave the excuse that they planned to travel to the United Arab Emirates to explore moving the business headquarters in Dubai. Co-founder Su Zhu also claimed that he and his co-founder Kyle Davies had received death threats.
Read more: 3AC co-founder Su Zhu tweets for first time since bankruptcy
A final SBF crypto empire curiosity: SBF and SushiSwap (SUSHI)
Unconfirmed rumors have circulated that SBF is “Chef Nomi,” the anonymous creator of SushiSwap (SUSHI). Whoever Chef Nomi was, they relinquished control of SushiSwap to Sam Bankman-Fried after allegations of an exit scam in September 2020.
SBF had been an early supporter of the SushiSwap protocol, a DeFi wallet that users could use to swap, lend, or stack their holdings. He was also one of the most vocal critics of Chef Nomi when the anonymous owner drained the liquidity pool by swapping out his SUSHI tokens for ETH.
SBF told Forbes that he had not expected Chef Nomi to hand over the keys to SushiSwap but planned to support continued efforts to fork SushiSwap away from its predecessor, Uniswap (UNI).
Eventually, Chef Nomi returned $14 million in ETH to SushiSwap’s development fund. SBF then suggested reducing the supply of SUSHI. In the end, 98% of eligible voters for SushiSwap approved that proposal of moving control of the keys over to a multi-signature wallet.
Nearly two years later, SBF discussed DeFi protocols such as SushiSwap with Bloomberg’s Matt Levine. Levine commented that SBF’s description made DeFi sound like a Ponzi scheme.
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