Crypto Genius played League of Legends while luring investors

FTX CEO Sam Bankman-Fried spent the last year on a winning streak. «crypto kingpin” was right on Bloombergits crypto summit over the summer and was crowned as one mega donor saviour to the Democrats in the midterm elections. His company even enjoyed his playing League of Legends during high-level meetings with investors who would continue to pour hundreds of millions into his burgeoning crypto-exchange empire. Now, in just one week, it has all come crashing down.

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It started on 2 November then Coindesk reported that Bankman-Fried’s trading firm, Almeda Research, held $14.6 billion in FTT coins, a token created by his crypto exchange, FTX. This was considered very bad for a number of reasons, including that it’s never a good sign when $14.6 billion worth of one token is held by one company. At its height, each token was worth over $70. Now they trade for less than $4, a loss of nearly 95 percent, depending on when the tokens were purchased.

Binance, the largest crypto exchange in the world and FTX’s main rival, tweeted about how this didn’t look good, which then triggered a sort of “run on the bank” with people trying to pull their money out of FTX. The value of the token crashed. Binance offered to buy FTX. It then took a look at FTX’s books and said no thanks. Now FTX, valued at $32 billion just a few months ago, is circling the drain regulatory investigations, potential lawsuitsand apparent bankruptcy.

At the center of all this, however, is Bankman-Fried. It has been all ways of crypto fraud, but the whole point of FTX was for it to be legal, partly because it was run by a very smart guy. None of this crypto crap makes any sense to you? Do not worry, this guy has figured it out and he’s going to make you and him billions with his really smart ideas about finance and crypto. And he will do it ethical. “A 30-year-old crypto billionaire wants to give away his fortune,” it says one Bloomberg heading. “Sam Bankman-Fried drives a Corolla, sleeps on a bean bag and has a Robin Hood-like philosophy.”

And many people were convinced. Even if you don’t think you’ve ever heard of FTX or Bankman-Fried, you’ve probably seen the approximate $25 million commercial for both with Larry David at this year’s Super Bowl. The man poured $40 million into the 2022 midterm races to push the importance of pandemic preparedness. Stonk memelords were totally convinced that GameStop’s NFT cooperation with FTX was supposed to help take the ailing video game retailer to the moon.

In fact, Bankman-Fried was so smart that he could tell some of the biggest investors in the world why they should give him their money in the middle of a League of Legends team fight. In accordance a September profile of Bankman-Fried, he did just that while on a Zoom call with venture capital firm Sequoia trying to secure additional funding for FTX by talking about how the crypto exchange would become a “super app.” Here is an excerpt:

That’s when SBF told Sequoia about the so-called super app: “I want FTX to be a place where you can do anything you want with your next dollar. You can buy bitcoin. You can send money in any currency to any friend anywhere in the world. You can buy a banana. You can do whatever you want with your money from FTX.”

Suddenly the chat window on Sequoia’s side of Zoom lights up with partners freaking out.

“I LOVE THIS FOUNDER,” wrote one partner.

“I’m a 10 out of 10,” pinged another.

“YES!!!” exclaimed a third.

What Sequoia responded to was the scope of SBF’s vision. It wasn’t a story about how we can use fintech in the future, or crypto, or a new type of bank. It was a vision of the future of money itself – with a totally addressable market for every person on the entire planet.

“I was sitting ten meters away from him, and I walked over and thought, ‘Oh, shit, that was really good,'” Arora recalls. “And it turns out that bastard was playing League of Legends throughout the entire encounter.” “We were incredibly impressed,” says Bailhe. “It was one of those meetings you bounce back from.”

Not only that, says Arora, but League of Legends is the type of multiplayer online battle arena video game where every four minutes or so of tactical maneuvering is interrupted by ten seconds of action known as a gank—gamer slang for “gang kill”—in which you and your team gang up on an enemy. “There’s a battle going on, basically,” says Arora, who was looking over SBF’s shoulder as he answered Sequoia’s final question, “and I’m thinking this guy’s in for a blast!”

After that meeting, Sequoia ended up investing over $200 million in FTX. But really they invested in Bankman-Fried Magic the Gathering nerd and the financier who was supposed to deliver them one app to control them right after he had trampled some randos (FTX is also a $210 million sponsor from pro League team TSM). Yesterday, Sequoia zeroed out the entire investment as worthless.

“I don’t know how I know, I just know,” Adam Fisher, the author of the excerpt above, wrote in his glowing September profile. “[Sam Bankman-Fried] is a winner.”

“Published 6 weeks ago,” one commenter quoting that section answered online. “Age well, don’t you?”

Fisher wrote back: “It’s horrible in hindsight. I’m not going to quit my day job to become a tech investor, I’ll tell you that.”

But Fisher is just a freelancer. Who paid for the profile? Why, Sequoia of course. You can read “Sam Bankman-Fried has a savior complex – and maybe you should too” over on its website, but with a new editorial.

“We’re in the business of taking risks,” reads part one letter update partners. “At the time we invested in FTX, we ran a rigorous due diligence process.”