Meet Queen Caroline and other characters in FTX’s stunning Collapse

Inside Sam Bankman-Fried’s Doomed FTX Empire

The Wall Street Journal Takes a Look Inside Sam Bankman-Fried’s Doomed FTX Empire

It’s a free link. Here are some excerpts.

The emerging picture of what went wrong suggests that the crypto empire was a mess almost from the start, with few limits, financial or personal.

From its inception, the company was an unruly agglomeration of corporate entities, client assets and Mr. Bankman-Fried himself, according to court documents, corporate balance sheets shown to bankers and interviews with insiders. employees and investors. No one could say exactly what belonged to whom. Prosecutors are currently investigating his collapse.

Business money was used to purchase real estate, but records were not kept. There was not even a list of employees, let alone the terms of their employment. Bankruptcy records show an entity’s outstanding loans include at least $1 billion to Mr. Bankman-Fried personally and $543 million to a senior lieutenant.

The lives of the people who ran FTX and its related companies were also hazy. Ten of them lived and worked together in a $30 million penthouse at an upscale resort in the Bahamas. The hours were arduous and the boundaries between work and leisure were difficult to discern. Romance among Mr Bankman-Fried’s upper echelons was common, as was the use of stimulants, according to former employees.

“Nothing like regular amphetamine use to make you appreciate how stupid a normal, non-drug human experience is,” Ms Ellison tweeted. A lawyer for Ms Ellison declined to comment.

To the outside world, Mr. Bankman-Fried was the mayor of Cryptoland, the man charged with convincing lawmakers, investors and enthusiasts that he had built a new kind of finance. He urged Congress and regulators to approve his crypto trading model. On Twitter, he berated competitors for practices he called dangerous.

FTX and Alameda, the trading company, extended hundreds of millions of dollars in credit to back struggling lender BlockFi and made an unsuccessful bid to prevent lender Voyager Digital from going bankrupt.

Mr Bankman-Fried’s heroism drew comparisons to the private bailouts of John Pierpont Morgan that helped end the Panic of 1907.

What is an FTT worth?

Humans have assigned value to objects for eons. A dollar bill is just a piece of paper, after all. But its value comes from traditions and agreements, laws and practices formed over hundreds of years. Cryptocurrencies compress this into a single keystroke: create a cryptographic token with code, give it a name, and trick someone into thinking it’s worth $10. If you hold a hundred thousand of these tokens, you now have an asset worth a million dollars, in theory.

Alameda holds the lion’s share of FTT in existence. Before collapsing, Alameda had valued its FTT at $5.5 billion, according to the document. [Mish Comment: Now it’s about $8 billion in the hole.]

After a stint in Hong Kong, Mr. Bankman-Fried and FTX made the Bahamas their home, moving in 2021 to take advantage of the island nation’s crypto-friendly regulatory regime.

On the archipelago’s New Providence Island, an 80-square-mile oasis that resembles its financial elite like a small club, FTX has landed with a bang, according to island residents. The company quickly acquires high-end real estate.

Bahamian Prime Minister Philip Davis hoped that FTX would help center his country as the nexus of the crypto world, he has said in several public speeches. When given the opportunity to buy FTX stock earlier this year, a Bahamian FTX worker said employees had spent thousands of dollars each on stock.

FTX hired a Bahamian security company to guard FTX’s headquarters shortly before the collapse. After the news, the majority of non-local FTX employees left the island. Security guards said they were protecting nearly vacant buildings.

Before the company’s collapse, FTX employees frequented Island Brothers, an upscale French bistro a stone’s throw from the company’s headquarters, restaurant workers said. The owner got to know Mr. Bankman-Fried’s father, Stanford tax specialist Joseph Bankman, when he visited Nassau to spend time with his son.

Last week, the fall of FTX brought Mr. Bankman to Island Brothers in a dark mood. After a few jokes, the restaurant owner said, Mr. Bankman broke down in tears.