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FTX cofounder Sam Bankman-Fried's empire collapsed this week following a liquidity crisis at one of his affiliates. The entire $16 billion fortune of the FTX CEO has now been wiped out, according to Bloomberg, making it one of the largest-ever wealth destructions in history.
From billions to zero.
— Bloomberg Crypto (@crypto) November 11, 2022
The entire $16 billion fortune of FTX co-founder Sam Bankman-Fried went up in smoke within days, one of the greatest wealth destructions in the history of the crypto world https://t.co/EPyb2Oiikz
Because of a potential trading halt, the Bloomberg Billionaires Index has diminished the value of FTX's U.S. business, in which Bankman-Fried owns a 70% stake, from $8 billion (a figure taken from a January funding round) to $1. After Reuters reported that the FTX founder's $500 million+ investment in Robinhood was held through Alameda and might have been used as collateral for loans, that investment was also removed from the calculation of his net worth.
The collapse of his cryptocurrency exchange and its trading firm, Alameda Research, has rendered the assets possessed by the entrepreneur, once referred to as one of the richest in crypto, worthless. Fried's worth was $26 billion at its highest point, and he started the week with almost $16 billion in net worth.
Authorities in the Bahamas, where FTX.com is headquartered, froze the assets of its linked parties and local trading businesses.
Alameda winding down?
According to Wu Blockchain, sources said Alameda held a meeting today where all employees resigned. Some employees sent farewell messages to former partners. On Nov. 10, SBF stated that "Alameda Research is winding down trading."
Three sources told us that Alameda had held a meeting today and all employees resigned. Some employees sent farewell messages to former partners. On November 10, SBF stated that "Alameda Research is winding down trading". @TechFlowPost
— Wu Blockchain (@WuBlockchain) November 11, 2022
Investors and market observers await clarity on the status of FTX, FTX US and Alameda as the company faces a liquidity shortfall of as much as $8 billion. FTX seems to be currently teetering toward bankruptcy.
FTX.US, its U.S. subsidiary, said on Thursday that trading may be suspended in a few days, urging customers to close any positions they choose to.
According to recent reports, Sam Bankman-Fried has been working to secure new financing to save his company. According to Reuters, he is negotiating to raise $9.4 billion from investors such as Justin Sun, the cryptocurrency exchange OKX and some other funds.
Users will now be able to withdraw some tokens from the embattled exchange, according to FTX, which said it had reached an arrangement with Tron founder Justin Sun.
Tether, on the other hand, says it does not have any plans to invest in or lend money to FTX or Alameda.