Sam Bankman-Fried. Photo by Bloomberg.

Sam Bankman-Fried’s Late-Night Move and How the FTX House Crumbled

Photo: Sam Bankman-Fried. Photo by Bloomberg.

Late last night, Sam Bankman-Fried sent a message he never thought he would send. He reached out to rival Changpeng Zhao, known as CZ, CEO of crypto trading platform Binance and asked him if he would buy—and save—FTX, a person close to the deal told me. By early in the morning Pacific time, he had his answer. He would be selling his startup, which had helped transform the world of crypto investing and been valued at an astonishing $32 billion by the world’s leading private investors, for nothing. The more than $1.5 billion in financing he had raised was going “Poof!”

When journalists have suspicions about a business, they like to call it a “house of cards.” It’s a vivid analogy that basically means “We can’t tell you what is wrong with the business, but something is.” It honestly irks me when people throw the expression around without doing the work to explain what’s happening, but it is also important to follow one’s instincts. And for a while now, a lot of people have had a funny feeling about crypto and specifically about FTX, one of the world’s most popular places to buy and sell cryptocurrencies. Specifically, the thing that didn’t smell right was FTX’s relationship with crypto trading fund Alameda Research, which Bankman-Fried also controlled. 

Access on the go
View stories on our mobile app and tune into our weekly podcast.
Join live video Q&A’s
Deep-dive into topics like startups and autonomous vehicles with our top reporters and other executives.
Enjoy a clutter-free experience
Read without any banner ads.
Art by Clark Miller
The AI Age e-commerce ai
How to Grease a Chatbot: E-Commerce Companies Seek a Backdoor Into AI Responses
When Andy Wilson’s company received its first successful client referral through ChatGPT, he was shaken to his core.
Art by Clark Miller.
Exclusive startups crypto
MoonPay CEO, Other Executives Cashed Out Before Crypto Business Dropped
In November 2021, just as crypto prices were hitting all-time highs, MoonPay—a crypto payments startup that celebrities including Jimmy Fallon and Paris Hilton had praised for its non-fungible token “concierge” service— announced it had completed its first ever outside fundraising: an eye-popping $555 million round at a $3.4 billion valuation from investors including Tiger Global Management and Coatue Management.
Nvidia CEO Jensen Huang. Photo by Bloomberg
semiconductors ai
Why Nvidia Aids Cloud Rivals of AWS, Google and Microsoft
Nvidia’s business of selling chips for artificial intelligence is going gangbusters, but the company faces a looming problem.
Tim Cook. Photo by Bloomberg
Exclusive apple ar/vr
Apple’s Learning Curve: How Headset’s Design Caused Production Challenges
If Apple unveils its long-awaited mixed-reality headset next week as expected, it will represent the company’s riskiest gamble on a new product since the iPhone.
Instacart CEO Fidji Simo. Photo by Getty.
Exclusive startups Finance
Growth Wanes at Instacart, Gopuff
Grocery upstarts Instacart and Gopuff haven’t been able to deliver two things at once this year: growth and profits.
Art by Clark Miller, Shutterstock (4)
Opinion ar/vr
Don’t Count the Metaverse Out
The technology hype cycle would have us believe that the metaverse—so recently the darling of digital trendsetters—is on the decline, its place usurped by generative artificial intelligence.