Crypto Billionaire Loses $14bn

After an estimated 94 percent overnight drop in his wealth, crypto billionaire Sam Bankman-Fried may no longer be able to go by that title, according to the Bloomberg Billionaires Index.

The Bloomberg wealth index assumes that the impending bailout of FTX by Binance will wipe out current FTX investors, including Bankman-Fried and Alameda.

Sam Bankman-Fried’s net worth now stands at roughly $1 billion, down from $15.6 billion on Tuesday. The 94 percent loss represents the largest one-day decline for any billionaire on the Bloomberg Billionaires Index. 

Bankman-Fried’s net worth: When he was at his wealthiest, Bankman-Fried ranked highly on Bloomberg’s wealth index, with a rumoured net worth of $26 billion. The crypto entrepreneur, however, is no longer listed among the top 500. 

His fortunes will likely be “eviscerated,” according to the outlet’s November 9 story, should the sale of his FTX Exchange to rival Binance pull through. 

Bankman-Fried owned a 53 percent stake in FTX, valued at about $6.2 billion before the news of the acquisition.

Bloomberg estimates that Bankman-Fried and other FTX investors will lose everything when the deal with Binance is finalised.

The impending acquisition: Nairametrics reported that FTX and Binance signed an agreement yesterday. The specifics of the deal are unknown. But we do know that it excludes FTX.US, the exchange’s American subsidiary. 

According to Bankman-Fried, the current arrangement with Binance is merely an informal letter of intent. In other words, Binance is free to “get out of at any point.” 

Binance founder’s remarks: Meanwhile, Binance CEO Zhao Changpeng has highlighted the lessons he learned from the latest cryptocurrency fiasco. He said:

• “Never use a token you created as collateral. Don’t borrow if you run a crypto business. Don’t use capital “efficiently”. Have a large reserve. Binance has never used BNB for collateral, and we have never taken on debt.”

The optics: The impact of FTX and Bankman-Fried is likely more than that of Three Arrows Capital, whose failure only a few months earlier sent shockwaves through the sector. 

Nonetheless, the speed at which the deal was put together and the lack of details has caused concern in the crypto industry. According to those familiar with the situation, many FTX investors learned about the acquisition through Twitter.  

Nairametrics