NASSAU, Bahamas—Sam Banman-Fried’s $32 billion crypto-trading empire crumbled into searing bankruptcy last week, prompting irate clients, crypto cronies and Silicon Valley big shots to wonder how something that looked so promising could have imploded so quickly.
The emerging picture suggests that FTX wasn’t simply taken down by a rival, or undone by a bad trade or this year’s relentless fall in the value of cryptocurrencies. Instead, it had long been a chaotic mess. From its inception, the company was an unruly agglomeration of corporate entities, client assets and Mr. Bankman-Fried himself, according to court documents, company balance sheets shown to bankers and interviews with insiders. employees and investors. No one could say exactly what belonged to whom. Prosecutors are currently investigating his collapse.