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Was FTX a Lehman or an Enron?

Sam Bankman-Fried
Federal prosecutors are determined to prevent any resurrection of the S.B.F. legend. Photo: Tom Williams/CQ-Roll Call/Getty Images
William D. Cohan
November 13, 2022

The first entry in Sam Bankman-Fried’s multi-tweet apology summed it all up perfectly. “I fucked up, and should have done better,” he wrote on Thursday, shortly after a liquidity crisis caused his crypto exchange company, FTX, to collapse. You can say that again, Sam. I’ve seen a few stunning implosions in my day—Drexel Burnham, Enron, Worldcom, Bear Stearns, Lehman—but the financial disaster that is, or was, FTX, is one for the ages. On Friday, FTX—the brainchild of the 30-year-old wunderkind, who was once worth $25 billion and supposedly the richest person under 30 years old, less than a year ago!—filed for bankruptcy in Delaware. FTX and its associated maze of more than 100 affiliates and subsidiaries was worth more than $30 billion as recently as January. 

The story is still unfolding and will continue to unfold. Reuters reported on Saturday morning that “at least $1 billion” in customer funds had “vanished” and the loss could be as much as $2 billion, after Bankman-Fried “secretly transferred” $10 billion of customer funds to his hedge fund, Almeda Research, through a “backdoor” channel. (Sam texted Reuters that FTX did not “secretly transfer” any money and claimed that it was an “internal labeling” issue.)