Crypto Billionaire Who Backed Democrats Takes Blame for Collapse of $30 Billion Firm

One of the biggest names in the untamed world of cryptocurrencies, the Bahamas-based FTX exchange, was hurtling toward insolvency Thursday after its rivals scrapped plans to bail it out and customers scrambled to withdraw their assets before the final death knell.The saga has dragged the price of bitcoin, the most popular cryptocurrency, down to levels not seen for at least two years, and has the potential to cost prominent backers of the platform — everyone from football star Tom Brady and prominent Wall Street banks to the Ontario Teachers’ Pension Plan — billions of dollars. As recently as January, the company was raising money at a valuation north of $32 billion.The venture capital firm Sequoia Capital said Wednesday that it had completely written off its $210 million investment in FTX. “Based on our current understanding, we are marking our investment down to $0,” the Silicon Valley-based firm said.While the price of bitcoin and other cryptocurrencies was rebounding Thursday in line with the broader financial markets, the currency plunged as low as $15,840 on Wednesday from highs above $20,000 earlier in the week. Another popular cryptocurrency, Ethereum, lost nearly 30 percent of its value between Monday and Wednesday, but had recovered about half those losses by Thursday morning.FTX’s tousle-headed honcho, Sam Bankman-Fried, in his first public comments since the unraveling began, wrote an apology on Twitter Thursday morning admitting that, as he put it, he “f—ed up.” He said his top priority is “doing right by users.”“All of the stakeholders would have a hard look at FTX governance,” Mr. Bankman-Fried wrote. “I will not be around if I’m not wanted.”In the same statement, Mr. Bankman-Fried said FTX’s more than one million users around the globe attempted to withdraw as much as $5 billion on Sunday in the cryptocurrency equivalent of a bank run. The run was precipitated by public comments by the head of a rival exchange calling into question the stability of FTX’s business.In the past two years, Mr. Bankman-Fried became something of an icon in the close-knit crypto world, sponsoring high-profile sports, buying Super Bowl ads and the naming rights to a stadium in Miami, and donating millions of dollars to Democratic candidates around the country, up to and including President Biden. According to Open Secrets, Mr. Bankman-Fried donated nearly $40 million to candidates during the 2022 cycle — most of it to Democrats.After the implosion began, the same rival that prompted the problems in the first place, Binance, said on Tuesday that it would step in to bail out FTX — only to reverse itself the next day after saying it had significant concerns about the company. “In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help,” Binance said in a statement.The Binance statement also expressed concerns about what it called “mishandled customer funds” as another reason for backing out of the deal, an apparent reference to reports that FTX lent billions of dollars in customer assets to an affiliated trading firm, Alameda Research, which then used the money to fund risky bets that later soured. Mr. Bankman-Fried told investors earlier this week that Alameda owes FTX as much as $10 billion.In internal FTX correspondence obtained by several media outlets, Mr. Bankman-Fried told employees of the firm Thursday morning that he was still seeking outside financing to keep the company afloat but warned that a deal may not be forthcoming. “The goal of the raise will be first to do right by customers; second by current and possible new investors,” he wrote in the memo, which was obtained by the New York Times, among others. “Third, all of you guys.” Late Thursday, the Associated Press reported that authorities with both the Department of Justice and the Securities and Exchange Commission are examining FTX to determine whether any criminal activity or securities offenses were committed. The person would not discuss details of the investigations publicly and spoke to the AP on condition of anonymity.

Crypto Billionaire Who Backed Democrats Takes Blame for Collapse of $30 Billion Firm

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