Sam Bankman-Fried, once the trusted and public face of cryptocurrency, is now left grappling with a crisis. His crypto exchange FTX faces a shortage of $8 billion and will go bankrupt unless it can get more funding.
Rival Binance agreed to buy FTX on Tuesday, only to withdraw the offer the next day.
For long, there had been doubts about FTX’s financial standing. Those with knowledge about FTX and its sister organisation Alameda Research describe it as a place where there is lack of oversight and nepotism and conflict of interest prevail, CoinDesk reported.
The website spoke to present and former employees, who chose to remain anonymous.
“The whole operation was run by a gang of kids in the Bahamas,” one source said.
The gang they referred to are those who share a luxury penthouse with 30-year-old Bankman-Fried in the Bahamas. Many are his former colleagues or those he knows from college. CoinDesk reported that members of the group are or were dating each other at some point.
According to a Wall Street Journal report, FTX siphoned funds of its customer funds amounting to billions of dollars to fund Alameda’s “risky bets”
Sources told CoinDesk only Bankman-Fried’s close circle might have known about that.
The crisis at FTX has reverberated across the crypto world. Bitcoin hit its lowest point in two years on Thursday.
There are fears that FTX may have to sell off its assets to stay afloat.
Bankman-Fried has taken responsibility for the meltdown, saying: “I was CEO, which means that I was responsible for making sure that things went well. I ultimately, should have been on top of everything. I clearly failed in that. I’m sorry.”