$26बी आपदा: कैसे सैम बैंकमैन-फ्राइड ने 10 दिनों में एफटीएक्स को मार डाला

मूल अंग्रेज़ी प्रतिलेख। शीर्षक, सारांश और सामान्य प्रश्न अनुवादित हैं। पूर्ण कथन YouTube उपशीर्षकों के माध्यम से आपकी भाषा में उपलब्ध है।

दो हजार बाईस नवंबर में सैम बैंकमैन-फ्राइड की कीमत कागज पर छब्बीस अरब डॉलर थी।

FTX दुनिया का दूसरा सबसे बड़ा क्रिप्टोकरेंसी एक्सचेंज था। टॉम ब्रैडी विज्ञापनों में दिखाई दिए। लैरी डेविड ने सुपर बाउल विज्ञापन में अभिनय किया। मियामी हीट एफटीएक्स एरिना में खेला गया। मर्सिडीज़ फ़ॉर्मूला वन कारों पर FTX लोगो लगा हुआ था। सैम बैंकमैन-फ्राइड ने व्यक्तिगत रूप से संयुक्त राज्य अमेरिका के राजनेताओं को चालीस मिलियन डॉलर का दान दिया और वह देश में दूसरे सबसे बड़े राजनीतिक दानकर्ता थे।

Then in ten days, FTX collapsed.

The customer money was gone. Eight billion dollars was missing. Sam Bankman-Fried was sentenced to twenty-five years in federal prison.

This is how a thirty-year-old MIT graduate built a thirty-two billion dollar exchange on top of a mechanism to funnel customer deposits into his own trading firm. How a man who claimed to be a vegan effective altruist sleeping on a bean bag was actually running a fraud operation that prosecutors compared to Bernie Madoff. And how every single one of his political and Hollywood patrons walked away clean.

This is the story of FTX. And how it ended.

Cambridge Massachusetts, two thousand and fourteen. A twenty-two-year-old MIT physics graduate named Sam Bankman-Fried takes a job at the proprietary trading firm Jane Street. He is the son of two Stanford law professors. He is brilliant at probability theory. He is, by his own description, socially awkward, perpetually rumpled, and not particularly interested in money for its own sake. He becomes interested in something called effective altruism. The idea is that the morally optimal life is to maximize earnings and donate the surplus to high-impact charity.

In two thousand and seventeen Bankman-Fried discovers that Bitcoin is trading at a higher price in Asia than in the United States. The gap is sometimes ten percent. He quits Jane Street, moves to Berkeley California, and founds a trading firm called Alameda Research with a small group of effective altruist friends. He recruits Caroline Ellison, a recent MIT graduate. He recruits Gary Wang, an MIT classmate, as the technical co-founder. He recruits Nishad Singh, a friend from high school, as the engineering lead. They start arbitraging the kimchi premium between Korean and American Bitcoin exchanges.

By the end of two thousand and eighteen, Alameda has reportedly made twenty million dollars.

In two thousand and nineteen Bankman-Fried founds a cryptocurrency exchange called FTX, headquartered in Hong Kong, then later moved to the Bahamas. The pitch is sober. FTX will be the responsible adult of crypto. While the rest of the industry is full of wild west operators, FTX will lobby Washington for sensible regulation. Bankman-Fried personally meets with senators and SEC commissioners. He gives Congressional testimony. He wears a suit when he has to. He is photographed in front of the Capitol.

By two thousand and twenty-one FTX is valued at eighteen billion dollars. Sequoia Capital, BlackRock, Tiger Global, the Ontario Teachers Pension Fund, the Singapore sovereign wealth fund Temasek — all of them invest. Sequoia writes a profile that calls Bankman-Fried a unique synthesis of intelligence and altruism.

By early two thousand and twenty-two, FTX is valued at thirty-two billion dollars. Bankman-Fried is on the cover of Forbes and Fortune. The Miami Heat sign a nineteen-year deal to rename their arena FTX Arena. The Mercedes Formula One team puts the FTX logo on their cars. Tom Brady and Gisele Bündchen agree to a multi-million dollar endorsement contract paid mostly in FTX stock. Larry David films a Super Bowl commercial in which he dismisses the wheel, the lightbulb, the moon landing, and finally cryptocurrency, with the joke being that doubting FTX would be like doubting the wheel.

Sam Bankman-Fried becomes the second-largest political donor in the United States after George Soros. He gives forty million dollars in the two thousand and twenty-two election cycle, almost entirely to Democrats. His brother Gabe runs a related political operation called Guarding Against Pandemics. The donations are publicly framed as effective altruism applied to politics: defeat candidates who would block pandemic preparedness funding.

The image is a thirty-year-old responsible adult who happens to run the cleanest crypto exchange in the world.

The substance is something different.

Behind the scenes, FTX customer deposits are flowing into bank accounts owned by Alameda Research. When customers wire dollars to FTX, the wires arrive in accounts named after Alameda. When a customer trades on FTX, behind the scenes, the order often clears against Alameda's trading desk. Alameda is using customer money to make leveraged bets on cryptocurrency.

Alameda has another secret. Its trading desk has been given a special exemption from FTX's auto-liquidation rules. When any other trader on FTX takes a losing position larger than their collateral, the exchange auto-closes the position to protect its solvency. When Alameda takes a losing position larger than its collateral, nothing happens. The position stays open. The losses accumulate. The accounting team is told not to display Alameda's balance to anyone outside the inner circle.

Caroline Ellison is the official CEO of Alameda. She and Bankman-Fried date for several years. They break up in two thousand and twenty-two. She stays on as CEO. Her job is to deliver returns. The returns come from leveraged bets that work most of the time, until they don't. Internal Slack messages from Caroline, later revealed by prosecutors, describe gradually larger and larger holes between what Alameda has on the books and what it actually has in liquid assets. Eventually the hole reaches eight billion dollars.

The eight billion dollars is customer money that was supposed to be sitting in segregated FTX wallets and was instead being used to bet on cryptocurrency by Alameda Research.

On November second, two thousand and twenty-two, the cryptocurrency news site CoinDesk publishes a leaked Alameda balance sheet. The balance sheet shows that Alameda's largest asset is FTT, a token issued by FTX itself out of thin air. The implication is obvious to anyone reading carefully. Alameda's stated wealth is mostly invented. If FTT loses value, Alameda becomes insolvent. If Alameda becomes insolvent, FTX, which is funded by Alameda, becomes insolvent.

On November sixth, the chief executive of the rival exchange Binance, Changpeng Zhao, tweets that Binance will sell all of its FTT holdings, citing the recent revelations.

The bank run begins immediately.

In seventy-two hours, customers withdraw six billion dollars from FTX. FTX has nowhere near six billion dollars in liquid assets. The unencumbered customer balances supposed to be sitting safely on the exchange are not there. They are in Alameda's leveraged crypto positions, which are now down significantly in a falling market.

On November eighth, Bankman-Fried announces that Binance will acquire FTX. By the next morning the deal is dead. Binance's diligence team has looked at FTX's books and seen the eight billion dollar hole.

On November eleventh, two thousand and twenty-two, FTX files for Chapter eleven bankruptcy. Sam Bankman-Fried steps down as CEO. The new CEO is John J Ray III. Ray is the man who managed the wind-down of Enron after the two thousand and one collapse. Ray's first courtroom statement, filed within days of taking over, is brutal.

Quote: Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here. From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.

The collapse is total.

Customer accounts: frozen. Five million customer accounts globally hold their funds in suspended animation. The Bahamas government takes possession of FTX's local assets. The U.S. Department of Justice begins a criminal investigation immediately.

On December twelfth, two thousand and twenty-two, Bahamian police arrest Sam Bankman-Fried at his parents' home in Palo Alto, California. He is held briefly in a Bahamas prison and extradited to the United States on December twenty-second. He is released on a two hundred and fifty million dollar bond and confined to his parents' home.

Caroline Ellison pleads guilty to federal fraud charges within weeks. She agrees to cooperate with prosecutors. Gary Wang and Nishad Singh follow.

The trial begins on October third, two thousand and twenty-three, in the Southern District of New York. Caroline Ellison takes the witness stand for the prosecution. She testifies for three days. She describes Bankman-Fried directing her to take customer funds. She describes the special Alameda exemption from FTX's risk controls. She describes the meetings where Bankman-Fried strategized how to defend the missing money to investors and to journalists. At one point on the stand she breaks down crying.

Sam Bankman-Fried testifies in his own defense for thirty hours over four days. His testimony repeatedly contradicts his own emails, his own Slack messages, and the testimony of three different cooperating witnesses. The judge later notes that the jury can clearly tell when he is lying.

On November second, two thousand and twenty-three, the jury convicts Sam Bankman-Fried on all seven counts. Wire fraud. Conspiracy to commit wire fraud. Securities fraud. Conspiracy to commit securities fraud. Conspiracy to commit money laundering. Conspiracy to misuse customer funds. Conspiracy to commit commodities fraud.

On March twenty-eighth, two thousand and twenty-four, Sam Bankman-Fried is sentenced to twenty-five years in federal prison.

Caroline Ellison receives twenty-four months. She cooperated. Gary Wang receives no prison time. He cooperated. Nishad Singh receives no prison time. He cooperated.

Tom Brady and Gisele Bündchen are named in a class-action lawsuit by FTX customers. They settle in two thousand and twenty-five for an undisclosed amount.

The political donors do not return the money. Forty million dollars from FTX customer deposits, funnelled through Sam Bankman-Fried's personal political contributions, sat in U.S. campaign accounts and was spent in the two thousand and twenty-two election cycle. None of those campaigns were required to give it back.

Sequoia Capital writes its FTX investment to zero. Tiger Global writes its FTX investment to zero. The Ontario Teachers Pension Fund writes its FTX investment to zero. The Singapore sovereign wealth fund writes its FTX investment to zero. None of these institutional investors face any consequences. Sequoia Capital remains one of the most powerful venture capital firms in the world. Tiger Global continues to raise multi-billion dollar funds.

The new CEO John J Ray spends two years tracking down FTX assets. By two thousand and twenty-four, the Chapter eleven estate has identified roughly fourteen and a half billion dollars in recoverable assets, mostly because the cryptocurrency markets recovered after Bankman-Fried's arrest. The court estimates that customer claims will eventually be paid back at one hundred and nineteen cents on the dollar of their original claim value, calculated as of November eleventh two thousand and twenty-two.

This is, on the face of it, a happy ending. The customer money came back.

It is not a happy ending.

The customers paid back at one hundred and nineteen cents on the dollar are being paid back in dollars valued as of the petition date. In November two thousand and twenty-two, one Bitcoin was worth approximately seventeen thousand dollars. In two thousand and twenty-five, one Bitcoin is worth approximately one hundred thousand dollars. A customer who held one Bitcoin on FTX in November two thousand and twenty-two received twenty thousand and twenty-three dollars instead of approximately one hundred thousand dollars of Bitcoin. The other eighty thousand dollars went to repay creditors at one hundred percent and to the bankruptcy estate's attorneys.

Sam Bankman-Fried is in federal prison until approximately twenty forty-three.

He is appealing the conviction.

The framing of the FTX story has shifted over time. For a while it was a cautionary tale about effective altruism. Then it was a documentary. Then a feature film. The general public lessons were always presented as if they were about Sam Bankman-Fried personally, about a brilliant young man who lost his way, about cryptocurrency itself being the problem.

They are not.

What FTX really was, was a series of decisions made by professional adults with full information.

Sequoia Capital did not get tricked. They had auditors who could have looked at FTX's books. They chose not to look hard. The Ontario Teachers Pension Fund did not get tricked. They had a fiduciary duty to their pensioners and they performed minimal diligence. The journalists who profiled Bankman-Fried did not get fooled. They published press releases in editorial form. The political campaigns that took his money did not ask where the money came from. The Hollywood endorsers did not investigate the company they were promoting.

The customers who lost their crypto holdings did not get to make any of these calculations. They paid for everyone else's bet.

This is the receipt of FTX. The valuation went from thirty-two billion dollars to zero. The founder went from Forbes covers to a federal prison cell. The depositors went from holding their crypto to holding nothing. And the structures that made it all possible — the Bahamas-incorporated exchange escaping U.S. regulatory oversight, the dual-role founder running both an exchange and a trading firm against its customers, the political donation pipeline laundering customer funds into Washington — are all still possible today.

Almost no laws have changed.