Sam Bankman-Fried story

Here's 30-year-old Sam Banksman Fred, who built himself up from zero to $26 billion in 8 years, but just one tweet catapulted his entire empire overnight, landing him on the Forbes Rich List. started to be discussed on small and big platforms of the world because after all, to create so much wealth at such a young age, that too in just 8 years is an astonishing feat.

If we are told that a person with so much wealth has become the poorest person in the world overnight, it will be hard to believe, but this is exactly what happened in Sam Bankman-Fried case.

 But the question is, how did Sam  Banksman acquire so much wealth so quickly and how did just one tweet push him into the depths of poverty? Welcome to my blog post again.

  This story is very big but today I will try to explain you only the main parts in simple words.

Who is Sam Bankman-Fried

The story begins in 2014 when Sam Bankman-Fried graduated from MIT University and started working at a trading firm called Jean Street Capital where he came up with a life changing idea that could make him a lot of money. Sam found a loophole in cryptocurrency through which he bought bitcoins from the US and sold them to the Japanese market at high prices. This business was so profitable that he even made $25 million in a single day.

Alameda Research

With the money earned from here, Saim opened a crypto farm called Alameda Research. In this farm, he hired his college friends and ex-colleagues who worked with Sam at Jean Street Capital.

 At Jean Street Capital Pay Sime also met another character who would go on to become the source of Sime's downfall.

Caroline

Her name was Caroline Ellison, who was Sam's ex-colleagues as well as his girlfriend. There was no experience either.

What did Alameda Research do?

Now before proceeding further in this story we have to know what was Alameda Research's end job if in simple words it used to get its clients to invest in crypto currency by taking money from different investors to invest in crypto currency and In return, they were also guaranteed 15% annual profit until everything was going well, only one thing was quite abnormal and that was the experience of the operators of Alameda Research. Yes, Alameda Research had become a trust of people. The experience of Syme and his colleagues was much greater.

 After all, this group of ten people in their mid-twenties had billions of dollars at stake. Sime Banksman was so eager to get ahead that he launched his own cryptocurrency exchange in 2019. If not, let me tell you that cryptocurrency is bought and sold on crypto exchange.

 There are currently thousands of currencies and tokens in the crypto world that are sold or purchased

 on exchanges.

Alameda's investment was also in crypto-acids, for which he had to trade on other exchanges.

FTX EXCHANGE or FTT

To increase his profits, Sam Bankman-Fried launched his own cryptocurrency exchange called FTX, along with his own cryptocurrency called FTT.
Remember that FTX is the name of EXCHANGE and FTT is the name of a currency.
Now, because people had so much faith in Allready Sime and his ability, and Sime's own company, Alameda Research, had some pretty thick and thin investors, in no time millions of people trusted FTX and invested their money in FTX.  and started trading there. The benefit of any exchange is that a small percentage of all trades goes to the exchange.
Let's say if you bought a ten dollar currency of some trade, a fraction of that would be around $0.02.
Exchange Fees Go In It sounds like little to see, but when an exchange pays more than $100 billion in trades per day, a significant amount of exchange fees are incurred.

Sam's Greed

Now the step that Sam took after that was his greed and that led to his destruction. Sam started giving discount in trading fee to the users of the exchange who will keep their money in FTT currency instead of dollars.  The trading fee on them would have been either waived off or reduced greatly, now FTT had no value but to get this discount people started buying FTT and the price of such FTT went on increasing due to this the users  So the profit was taken, but the biggest profit was ultimately the CEO of FTX, Sam Banksman, because the currency that had no value was now trading at $80. It was a golden period for FTX and Sime, FTX everywhere.  There was talk of the Mercedes F1 team making FTX their advising partner, the UC Barclay Stadium to be renamed FTX, and the MPA Stadium in Miami being renamed FTX, along with Sime Banksman becoming successful and wealthy.  Everyone from the field of Inchart Cryptocurrency was crazy about FTX and FTT.  That is, as many people deposit their money on the exchange and trade there.
Their money should be lying there i.e. whenever they want to take it out of the exchange, they can easily withdraw it.
But in reality it happens that under normal circumstances not so many users withdraw their money at once either the market is crashing or in case of inflation people withdraw their money.
So, taking advantage of this, Saim started investing and blowing people's saved money in different coins and this was done very secretly, even the employees of FTX and Almeida did not get a clue.  Because Saim was in danger that his action might be leaked somewhere.
Sam thought he would trade with the customer fund money and send the profit earning customer fund money back to FTX, but Sams luck may have run out.

The Fall of FTX

At the same time, inflation will come in America due to which people started to liquidate their assets and in all of them, the money kept by the people who were lagging behind in the crypto market, where Saim and his partners had invested money, will be bad. And the worse news was that the news was leaked to the news agency Sime Banksman-Fred's girlfriend and Alameda Research CEO Caroline Ellison mistakenly said during a video call to the Wall Street Journal that FTX The money of the customer fund has been transferred to Elmeida. Everyone's ears stood up when they heard the name of the customer fund because this money belonged to the customer of FTX, which is a big crime to use.

 Sam tried hard to cover up the matter and said that everyone's money is safe and there is no need for anyone to worry.

changpeng zhao

Behind this whole issue there was a person watching quietly who has the most important role in this whole story and that was cz i.e. changpeng zhao who is the CEO of binance crypto exchange, Raoul of FTX and friend of Sam when Sa nim launched FTX EXCHANGE. CZ had put his share of 500$ million dollars in it. When FTX stood on its feet, Sime bought CZ back by giving two billion dollars, but these two billion dollars were not in US dollars but in FTT currency. CZ had kept these FTTs since then and had not sealed them. Saim had no idea that he was giving CZ not FTT currency but a bomb. CZ had so many. FTT thought he could sell them all together at any time and bring down Sime and his entire empire because that kind of currency may have a high value but not many buyers, but CZ didn't. Because maybe he was waiting for the right opportunity for so many years.

 When this whole issue was hot in the news, on 6th November 2022, CZ made only one tweet which was not going to shake the whole empire of Sam, but it was going to collapse. Have you decided to sell?

CZ had not yet sold his FTTs, but this tweet sent shockwaves through the entire crypto world. Those who had FTTs started selling them in droves and FTX customers started withdrawing their money from the exchange. It was done but if the money was withdrawn then it would happen when the money was there. Saim was now badly screwed and had no option but to fall at CZ feet.

 Sam and CZ had a few talks and it was determined that Binance was now buying FTX as well, but after both, CZ went online and tweeted outright refusing to buy FTX.

 Because CZ had screwed up more than Sam had thought, FTX was supposed to return $10 billion of people's money, but they actually only had $900 million, meaning Sime took out 90% of the customer's funds. Invested elsewhere where he suffered huge losses. What happened to the owner of 26 billion dollars the day before. Just two tweets made him 8 billion dollars in debt. And said that FTX and Alameda Banks have become corrupt.

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