The entire $16bn fortune of FTX co-founder Sam Bankman-Fried has been wiped out, one of history’s greatest-ever destructions of wealth.
The downfall of his crypto empire, which filed for bankruptcy on Friday along with his resignation, means assets owned by the mogul have become worthless.
At the peak, the 30-year-old was worth $26bn, and he was still worth almost $16bn at the start of the week.
The Bloomberg Billionaires Index now values FTX’s US business, of which Bankman-Fried owns about 70%, at $1 because of a potential trading halt, from $8bn in a January fundraising round.
Bankman-Fried’s stake in Robinhood Markets valued at more than $500m was also removed from his wealth calculation after Reuters reported it was held through his trading house, Alameda Research, and may have been used as collateral for loans.
FTX.US and Alameda were also part of the bankruptcy filing.
In announcing it was filing for Chapter 11 bankruptcy, FTX said in a statement that Bankman-Fried has resigned as chief executive officer and will be succeeded by John J. Ray III.
Employees are expected to continue with the company and “assist Mr. Ray and independent professionals” during bankruptcy.
Bankman-Fried’s empire crumbled this week after a liquidity crunch at one of its affiliates.
Its US exchange, FTX.US, said on Thursday that customers should close out any positions they want to and that trading may be halted in a few days.
In the Bahamas, where FTX.com is based, authorities froze the assets of its local trading subsidiary and related parties.
It’s possible Bankman-Fried owns assets not tracked by the Bloomberg index. Alameda made about $1 billion in profits last year and FTX made hundreds of millions more.
Tech news website The Information reported on Thursday that he had more than $500m invested in funds managed by Sequoia and other venture capital firms, and was also an investor in media startup Semafor. But if those assets are held through Alameda they might be wiped out by its losses.
For his part, Bankman-Fried is being investigated by the US Securities and Exchange Commission for potential violations of securities rules, a person familiar with the matter said.
Earlier this week fellow crypto firm Binance pulled out of a bid to buy FTX.
More than 130 entities tied to FTX.com, FTX US and trading firm Alameda Research Ltd. were part of the filings, according to a Twitter statement, with the Alameda petition alone listing assets and liabilities of at least $10bn each.
Chapter 11 bankruptcy lets a company continue operating while it works out a plan to repay creditors.
“It’s such an unfortunate, stunning, and shocking moment for the industry,” Owen Lau, analyst at Oppenheimer & Co. said by phone.
Rapid downfall of FTX
Crisis quickly befell FTX this month after prices for the exchange’s native crypto token, FTT, plummeted and users raced to withdraw their assets. R
Rival crypto exchange leader Changpeng “CZ” Zhao had earlier said he would sell some $529m of coins due to “recent revelations that came to light,” appearing to allude to a CoinDesk report that raised questions about Alameda’s financial health.
Crypto assets dropped on the news, with Bitcoin slumping as much as 8% before regaining some ground.
Ether and smaller tokens also declined. Solana, which was backed by Alameda, tumbled 10%. The firm’s implosion came almost exactly one year after Bitcoin peaked at around $69,000.
BlockFi, a troubled crypto lender that received emergency financing from FTX US earlier this year, on Thursday said it will pause client withdrawals citing “a lack of clarity” over the status of Bankman-Fried’s empire.
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