Risky Business
Alameda, by contrast, mostly operated out of the spotlight. It had just about 30 employees, but minted $1 billion in profit last year. Bankman-Fried founded Alameda first, in 2017, after leaving quant trading firm Jane Street, where he was a trader who peers considered smart, if unspectacular. FTX came into existence two years later.

Pairing up a trading firm with an exchange is risky. To keep customer funds safe, these functions are separate in more regulated markets—rules that don’t exist in crypto. 

To some, it was an open secret that the two businesses had intricate financial ties. A person who raised money from Alameda Ventures, its VC arm, described receiving funds from FTX instead.

It was ultimately concerns about Alameda that threw Bankman-Fried’s empire into crisis.

Reports of an Alameda balance sheet showing outstanding debts to FTX through its FTT tokens made investors skittish by the end of last week. Panic fully set in on Sunday, when Binance CEO Zhao, also known by his initials CZ, tweeted that his exchange was liquidating its holdings of FTT, worth more than $500 million.

Zhao offered to take over FTX on Tuesday, only to bail almost as quickly as he offered a rescue.

“The issues are beyond our control or ability to help,” Binance said on Wednesday. 

CZ called it a “sad day.” And added a crying emoji.

Signs Of Trouble
While FTX’s issues only spilled out into the public view in recent days, Bankman-Fried’s behavior had been worrying direct reports for weeks. 

Inside FTX, Bankman-Fried disappeared for at least a month from top deputies, according to people familiar with the matter. One department had trouble meeting payroll weeks ago, with little explanation as to why, one of the people said.

It wasn’t the first time that happened. Issues with pay started as early as the spring, when bonuses were delayed. That was around when some crypto projects and investors started to buckle, including the algorithmic stablecoin TerraUSD, hedge fund Three Arrows Capital and lender Celsius.

All the while, the company pushed to have pay packages put in FTX equity, which is now worth next to nothing.

At the first sign of a liquidity crisis, and even earlier, the smart money headed for the exits. Prominent market makers and hedge fund traders began withdrawing millions of dollars from FTX, according to people familiar with the matter. 

One red flag: Withdrawals that normally would take seconds required hours to go through, adding to concerns that something was off, one of the people said.

Still, large shareholders were blindsided. Many investors said they only found out about FTX’s problems when Binance extended its offer on Tuesday.

Even as the drama between FTX and Binance first unfolded, some investors and employees remained optimistic enough about FTX’s future that they were unwilling to sell their shares to prospective buyers, according to documents reviewed by Bloomberg. As of Monday, there were prospective FTX buyers who were unable to find willing sellers in the secondaries market, the documents showed.

Optimism Erased
That optimism quickly soured as the FTT token entered an 80% freefall over the next 24 hours, leaving VC firms rushing to tally the damage. Sequoia Capital, one of FTX’s best-known backers, marked its stake down to zero, sharing its losses on Twitter. 

Alongside customers, FTX employees described internal chaos as the crisis intensified. One said the balance sheet they’d seen hadn’t shown signs of liquidity problems, leading to fear there was a separate set of books. 

Bankman-Fried had come to embody two key tenets of the crypto industry—transparency and decentralization. But behind the tweet threads and assurances about FTX’s position, those within the firm started to doubt what they really knew about him.

“There was this cult of personality around Sam Bankman-Fried, where he was viewed as this kind of visionary, once in a lifetime mind,” said Molly White, a 29-year-old software engineer and blogger behind “Web3 is Going Just Great,” which for more than a year chronicled stories of grift in the world of virtual assets.

“People often ascribe genius to people who are just very wealthy, and I think that may have been a little what was happening,” she said.

Chasing Cash
As for that burning question—where was SBF as his empire collapsed?—it’s only starting to become clear.

Bankman-Fried spent time in the Middle East desperately trying to raise capital in late October, holding meetings with Saudi Arabia’s sovereign wealth fund and Abu Dhabi’s Mubadala Investment Co., according to people familiar with the matter. PIF and Mubadala spokespeople declined to comment.