IN JULY, THE GIANT cryptocura rency derivatives exchange FTX looked like a pillar of stability. The company and its slacker-chic founder, Sam Bankman-Fried, projected calm and confidence during so-called Crypto Winter, even swooping in to rescue weaker rivals.
That facade crumbled in just a few days in November. First, the value of FTX’s in-house token cratered; then FTX was in talks to be acquired by a rival; then it declared bankruptcy as the rival walked away. It was a stunning turn of events for a company that had been valued at over 30 billion, one regarded as a best-in-breed firm that could bring crypto into the mainstream of American finance.
The worst was still to come. FTX appears to have engaged in a massive fraud, lying to investors and looting customer funds, all while operating without board oversight or even basic financial controls. The 30-yearold Bankman-Fried had charmed investors, politicians, and the media including, yes, Fortune: We put him on our August/ September 2022 cover), but he came to be seen as a curly-headed cross between Elizabeth Holmes and Bernie Madoff.
Numerous regulatory and criminal investigations were underway as this story went to press. Bankman-Fried has said on social media that he fucked up,” but insisted he was naive, not nefarious.) Still, as investors and regulators scramble to determine how a massive fraud occurred right under their noses, it’s not too early to take stock of what we've learned.
HARD LESSONS
This story is from the December 2022 - January 2023 edition of Fortune US.
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This story is from the December 2022 - January 2023 edition of Fortune US.
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