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(SBF worked at FTX's Hong Kong office last year)

The chain reaction caused by the collapse of FTX is gradually emerging and continues to expand. Hundreds of companies have been implicated, and the entire encrypted finance has been hit hard. (recommended reading"Special Issue | FTX's liquidity is exhausted, and the Lehman moment in the encryption industry is coming (continuously updated)"）

"Special Issue | FTX's liquidity is exhausted, and the Lehman moment in the encryption industry is coming (continuously updated)"Today's article introduces the history of SBF's fortune, which may help us better understand this man who was once promoted to the "altar". Original author Gregory Zuckerman, Alexander Osipovich, compiled by Odaily, with deletions, please indicate the source for reprinting.

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(1) The birth of FTX

SBF grew up on the Stanford campus, near a student residence known for its vegan food and nude Halloween parties. Both his parents were professors at Stanford Law School: his father, Joseph Bankman, was a tax law expert, and his mother, Barbara Fried, studied the intersection of law, economics and philosophy.

After graduating from MIT with a physics major, SBF took a job at quantitative trading giant Jane Street. A former colleague recalls him as a shy junior trader. Like the rest of the company, he dresses casually, wearing a hoodie and walking around the office without shoes. Over time, he tried to push Jane Street toward effective altruism, which upset some in the company, the former colleague said.

In 2017, he started Alameda Research out of a rented house in Berkeley, California. In an interview this summer, SBF recalled that within two weeks the entire house was filled with Amazon.com delivery boxes as his small team ordered desks and computers at the time. “Literally every square foot of space is packed with cardboard boxes,” he said. “We can’t go to the kitchen.”

He hired an employee to handle running the business so he and his co-founders could focus on deals. Soon he moved Alameda to a WeWork office in Hong Kong, where cryptocurrency regulation is less stringent than in the United States.

Elsewhere in the WeWork space is a small office with several employees from another crypto firm, Binance, according to people familiar with the matter. The two companies are friendly, at least at first.

In January 2019, Mr. Zhao (CZ) attended an Alameda-sponsored party at a luxury villa in Singapore, following a Binance-sponsored blockchain conference, according to people who attended the party.

At the time, Alameda was planning to venture into the cryptocurrency exchange race. Four months later (May 2019), the exchange was officially launched under the name FTX, short for Futures Exchange. Binance also became one of the first investors in FTX.

Traders quickly flocked to FTX, and the exchange exploded, outpacing rivals that suffered from technical setbacks and a poor user interface, though it still trailed Binance.

"FTX has by far the best trading experience and the best design of any exchange, and we really think they're going to be the biggest in the business," said Josh Kruger, managing partner at $100 million hedge fund Coral Capital .

After initial success, SBF began raising funds to help FTX grow and improve its position in the industry. In 2020, when he reached out to senior investors at Silicon Valley venture capital firm Sequoia Capital (Sequoia Capital) via Zoom, they were immediately impressed and convinced by his vision.

“I want FTX to be a place where you can do anything you want with your money,” SBF said in an article about FTX on the Sequoia website.

""I like this founder." A Sequoia partner sent a message to a colleague."I give him a 10.

The Sequoia team didn't know at the time that SBF was actually introducing them to the road show while playing the video game "League of Legends". Of course, this was later admitted by SBF in the Sequoia article.

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(2) Financing and competition

Starting in 2021, FTX has raised a large-scale financing, raising nearly 2 billion US dollars in 7 months (investors include Sequoia Capital).

FTX's last funding round was in January 2022, at a valuation of $32 billion.

But FTX still has fewer customers than its main competitor — said to have around 1 million users last year, far behind the user bases of Binance and Coinbase. SBF is trying to lure new crypto investors through sports sponsorships and advertising, paying $135 million for naming rights to the Miami Heat basketball arena and buying comedian Larry David's Super Bowl ad.

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(FTX Arena in Miami)

The Binance vs. FTX rivalry intensifies. Last year, Binance sold about 20 percent of its stake in FTX, exchanging it for stablecoins and FTT tokens. In June, CZ quipped about SBF's pitch: "It wasn't easy saying no to Super Bowl commercials, stadium naming rights, big sponsor deals a few months ago, but we did."

On the regulatory side, FTX moved its headquarters to the Bahamas because the regulatory environment there is more friendly to cryptocurrencies. It opened in an office park, and real estate records show that FTX paid $30 million for a five-bedroom penthouse in a nearby luxury condominium. SBF has said he was one of FTX's original 10 employees who shared the house.

Alameda also does some of its business in the Bahamas, and SBF and Alameda CEO Caroline Ellison, a former Jane Street colleague, once dated, according to people familiar with the matter.

SBF has since embarked on a campaign for a regulatory license. In December 2021, he surprised many fans when he appeared at a Capitol Hill hearing on cryptocurrencies in a suit and tie. Soon, he was a regular in Washington, meeting with regulators and others. Some crypto players are also excited about SBF emerging as the public face representing the industry.

He provided $39.8 million in federal donations in the current U.S. midterm elections, according to OpenSecrets.org, making him the sixth-largest political donor in the country and the largest for the Democratic Party behind George Soros. sponsor,

On October 30th, SBF hinted at CZ's regulatory issues in a tweet. "Well, he's allowed to go to Washington, isn't he?"

Although SBF later deleted the tweet, it upset CZ, a person close to Binance said."This week, CZ said his intention was not to stifle competitors.

"I had no idea this would be the "straw that broke the camel's back". ’ he tweeted on Nov. 7."Alex Valaitis, founder of cryptocurrency consulting firm W3T Inc, said that CZ undermined confidence in FTX and triggered a run on investors' withdrawals.

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(3) Moving away from the encryption industry

For months, there have been signs that SBF is not quite what the outside world sees it to be.

During meetings with top Bahamian regulators, banks and other officials in January, SBF surprised some in attendance by frequently touting FTX’s capabilities. According to one attendee, SBF promised his company would dominate new markets, including stocks.

When a Bahamian official asked if FTX needed any infrastructure or other help from the local government, SBF politely said he wanted the country to allow Uber to operate there so his employees could Use it, then just leave the meeting abruptly.

When SBF tried to shore up several struggling cryptocurrency firms this summer, including brokerage Voyager Digital Ltd. and lender BlockFi Inc., some were struck by his aggressive style.

In one negotiation, SBF made an initial offer and refused to budge, a person involved in the talks said. He revealed that SBF's stubbornness surprised some of those involved in the negotiations, who had previously considered him a more friendly person.

Some FTX employees privately worry that the company is growing too fast and expanding into areas far from its core business, current and former FTX employees said. He relied on himself and a small group of FTX executives to negotiate the deal, didn't use outside advisers to help judge risks and expedited due diligence, according to people familiar with SBF's trading style.

Those deals are also costing: From October 2021 to March 2022, the company spent $1.1 billion on acquisitions, according to a FTX financial statement reviewed by The Wall Street Journal. The company also spent $153 million on sales and marketing last year and committed to spending $122 million on real estate, documents show.

In recent months, SBF has lost friends in the crypto space for its pro-regulation. More libertarian critics in the community have slammed a bill he accepted in Congress that was seen as strengthening government control over decentralized finance.

Outcry forced it to make concessions. “I could be wrong about those policies — I could be wrong about some of them!” he tweeted on Oct. 19.

However, the damage has already been done. "SBF is an encryption hero, but people's perception of him has changed." Josh Kruger, a partner at hedge fund Coral Capital, said, "Trying to push regulation through Congress is the last straw that crushed us."

SBF also tried to raise capital for its own venture, but was unsuccessful before the company collapsed. Last month, he attended a key Saudi business conference with financier and former Trump adviser Anthony Scaramucci. Anthony Scaramucci arranged for SBF to meet with big private equity firms and sovereign wealth funds including Saudi Arabia's state Public Investment Fund, but the cash never materialized, according to people familiar with the matter. People familiar with the matter said that FTX had contacted large investment institutions including TPG Inc, but the negotiations also came to no avail.