Anthony Scaramucci, who sold part of his SkyBridge Capital to FTX Ventures in September, helped raise capital.
“We were embarking upon helping him fundraise. He had purchased 30% of my business and so as good citizens we were trying to help him around the world,” he said in a CNBC interview Friday.
The talks failed to progress after FTX began its rapid implosion.
Meanwhile, with the boss away, some employees took matters into their own hands, looking for any way to raise cash.
Everything was up for grabs: FTX US Derivatives, an early platform for trading assets, clearing firm Embed, which handles trades, and even the naming rights to the Miami Heat’s arena. Voyager, saved from bankruptcy by Bankman-Fried, put out calls to investors in an attempt to buy itself back, according to a person familiar with the matter.
Though the companies FTX.US approached figured they could offer cents on the dollar, several backed away and began ignoring the calls, according to people familiar with the matter. It looked too risky to contemplate a purchase, especially once bankruptcy was put on the table this week, they said.
Missing Leaders
If Bankman-Fried was out of his depth earlier this year as the crypto industry began to teeter, he didn’t show it. But the departure of two members of his inner circle from Alameda and FTX.US earlier in the summer drew attention within the firms.
Bankman-Fried, who ran both Alameda and FTX until last year, handed the reins to Ellison and Sam Trabucco as co-heads in October 2021.
But Trabucco left in August under scantly explained circumstances, tweeting that he had “significantly reduced” his role in the company for months—suggesting he was heading for the exits after just entering the role. He said he was unsure of how he’d spend his time, but that he’d bought a boat.
Brett Harrison, who ran FTX.US, left shortly thereafter, also without immediately saying where he was headed.
Like most here, I was surprised and saddened by today’s news. I very much hope for an outcome that mitigates the impact on all those affected, and I’m grateful to everyone who is stepping up and continuing to build a stronger industry for us all.
— Brett Harrison (@BrettHarrison88) November 8, 2022
By Thursday night, with his supporters dwindling, Bankman-Fried seemed resigned to his fate. Despite tweeting earlier in the day about letters of intent and term sheets, he hadn’t secured a financing plan.
Bankman-Fried canceled an investor call, putting out one more short note for a lifeline.
“Realistically we’d need to be able to have at least $4 billion committed by morning if this pathway was going to work,” he wrote. “And I’m not optimistic about that. So unless someone has a billion at the ready to sign on an hour’s notice,” speaking with investors didn’t make sense, he said.
What Now?
On Friday, Bankman-Fried’s downfall was complete. He resigned as CEO of FTX Group after putting his empire in bankruptcy. Worth an estimated $15.6 billion at the start of the week, his major assets now have zero value, according to the Bloomberg Billionaires Index. Charities counting on his money appear likely to be left in the lurch.
Regulation, which the crypto industry has long sought to avoid, appears inevitable. Congressional leaders are wondering about when to send subpoenas, according to a person familiar with the matter.
“A lot of people have compared this to Lehman. I would compare it to Enron,” former Treasury Secretary Lawrence Summers said in a Bloomberg TV interview. “The smartest guys in the room. Not just financial error but—certainly from the reports—whiffs of fraud.”
John J. Ray III, who was appointed to replace Bankman-Fried as CEO, is a turnaround and restructuring expert who previously served senior roles in bankruptcies—including Enron’s.
All the while, about 1 million customers will likely remain in limbo, wondering when, if ever, they’ll get their money back from the curly-haired boy genius they trusted to lead them into a new frontier of finance. The fact that investors and employees were equally duped will likely be of little solace.
Despite all that’s transpired, a few true believers are still betting on Bankman-Fried.
On Polymarket, a crypto platform for wagering on event outcomes, users are betting on the question “Will SBF be federally indicted by end of year?” Odds are about 80% that he’ll avoid indictment.
There appears to be less optimism in the Miami offices of Bankman-Fried’s US exchange. By Thursday, someone had removed the small-lettered signage on the office door of FTX.US.
—With assistance from Katie Roof, Giles Turner, Ben Bartenstein, Felipe Marques, Hema Parmar, Hannah Miller, Anna Irrera and Gillian Tan.
This article was provided by Bloomberg News.