The many lies of Sam Bankman-Fried
Until recently, Sam Bankman-Fried (SBF) had one of the largest fortunes in the digital industry world, with an estimated net worth exceeding $16 billion. Yet now the world can see the truth: SBF lies a lot. Like most mark-to-market fortunes that only exist on paper, wealth can evaporate during a liquidity crisis.
Bloomberg reported that SBF has lost at least $15 billion in personal net worth this week. Rumors are already circulating that he has filed for bankruptcy protection.
Less is known about the fortunes of his other colleagues. Forbes estimated that SBF’s co-founder at FTX, Gary Wang, was personally worth over $4 billion in September.
The realities of SBF’s lies
SBF has made many misleading statements throughout his career. In May, SBF applied to the Commodity Futures Trading Commission (CFTC) for a prestigious license to operate direct clearing of futures contracts through FTX.US, claiming that FTX had superior technology and abilities versus any other domestic clearinghouse. Fast-forward just a few months and FTX is now insolvent.
He billed himself as a philanthropist and effective altruist, yet he donated almost none of his wealth. Most of his promises were to donate in the future, upon death. SBF said he would donate $1 billion to influence the next US presidential election and spend “north of $100 million” on contributions to political campaigns during this year’s midterm elections.
SBF only donated $40 million to political action committees and campaigns, most of it going to support the Democrat Party. He backtracked on his promise to donate $1 billion, calling it a “dumb quote.”
SBF tweeted and then deleted a claim that FTX funds are safe in the wake of chaos caused by an apparent back-and-forth between SBF and Binance CEO Changpeng Zhao (CZ). That was certainly a lie — withdrawal requests were suspended altogether. Sequoia wrote down its stake in FTX to $0.
Read more: Panic and resignations reign over FTX’s final days
In August 2022, the Federal Deposit Insurance Corporation (FDIC) sent a letter to FTX.US ordering it to stop claiming that the exchange had a deposit insurance policy with the FDIC. In a since-deleted tweet, SBF claimed it was a misunderstanding, and FTX.US meant that it worked with FDIC-insured banks.
As recently as September 19, 2022, SBF boasted about FTX having $1 billion to spend on acquisitions and bailouts. Even CZ questioned SBF’s reasoning in snapping up bankrupt companies like Voyager Digital and Celsius Network, calling them bad deals.
SBF posted a proposed regulatory framework that mostly favored the business interests of FTX, misleading the public by claiming that it was pro-crypto.
The list of lies by SBF are too long to enumerate. His misstatements have exacerbated the meltdown of his digital asset empire. Now, he could face criminal penalties; the US Justice Department is investigating FTX.
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