He has lost 94 percent of his wealth in a single day
The CEO of crypto giant FTX lost $15 billion of his personal fortune in a single day as his company faces a liquidity crunch and is bailed out by its rival.
Sam Bankman-Fried, 30, who boasted 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 for a billionaire.
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
On Twitter, Zhao appeared to be revelling in his rival’s collapse mocking 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. “Don’t borrow if you run a crypto business. Don’t use capital ‘efficiently’. Have a large reserve.
“Binance has never used BNB for collateral, and we have never taken on debt.”
Two big lessons:
1: Never use a token you created as collateral.
2: Don’t borrow if you run a crypto business. Don't use capital "efficiently". Have a large reserve.
Binance has never used BNB for collateral, and we have never taken on debt.
Stay #SAFU.🙏
— CZ 🔶 BNB (@cz_binance) November 8, 2022
Bankman-Fried is one of the biggest names in the crypto market, and at one time had a personal wealth of $26 billion.
He has previously made headlines by donating millions to political causes and charities.
The billionaire had 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.
Alameda is expected to see it’s value shrink to $1. It is not yet known if Zhao will bailout them as well.
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.”
“Binance has the discretion to pull out from the deal at any time,” he noted. “We expect FTT to be highly volatile in the coming days as things develop.”
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