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.
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.
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.