Crypto giant FTX’s CEO lost $16 billion of his personal fortune as his company faces a liquidity crunch and is bailed out by its rival.
Sam Bankman-Fried, 30, who touted last year that his crypto company would be big enough to buy Goldman Sachs, will see his fortune drop to $1 billion after receiving a bailout from rival Changpeng Zhao’s Binance, Bloomberg reports.
The 94 percent loss is the biggest one-day collapse ever among billionaires.
FTX’s token, which was valued at nearly $20 earlier on Tuesday, has now sunk more than 75 percent to just over $5.
In comparison, Bitcoin, the most popular of the cryptocurrencies, has its token currently valued at $18,480.21
Zhao, 45, appeared to gloat about his rival’s downfall on Twitter, chastising FTX’s decision to use its own cryptocurrency for more than $16 billion in collateral for another company owned by Bankman-Fried.
‘Two big lessons: Never use a token you created as collateral,’ Zhao wrote following news of the bailout. ‘Don’t borrow if you run a crypto business.’
Zhao announced that he will be taking over FTX on Twitter, and appeared to chastised Bankman-Fried’s decision to use his own cryptocurrency as collateral for his crypto trading company, Alameda
Bankman-Fried is widely considered one of the biggest names in the crypto market, with his personal wealth once peaking at $26 billion.
The young billionaire made headlines promising to shape the world by donating millions to political causes and charities.
Bankman-Fried had about a 53 percent stake in FTX worth about $6.2 billion, according to Bloomberg’s Billionaire Index.
However, his most valuable assets was in his crypto trading company, Alameda Research, which contributed $7.4 billion to his personal fortune.
Last Friday, reports revealed that a token issued by FTX, FTT, made up about 25 percent of Alameda’s $14.6 billion assets, and another token labeled ‘FTT collateral’ accounted for $2.16 billion.
Following the revelations, Zhao said his company would be liquidating its holdings of FTT, sending the token’s value crashing by 80 percent.
Along with FTX, Alameda is expected to see it’s value shrink to $1. It is currently unknown if Zhao will bailout Alameda along with FTX, spreading fear over those who invested in the crypto trading house.
Then on Tuesday morning, Zhao tweeted that FTX reached out for help amid the liquidity crunch.
‘There is a lot to cover and will take some time,’ Zhao said of the takeover. ‘This is a highly dynamic situation, and we are assessing the situation in real time.’