KryptoCurrency

December 23, 2024
Crypto

Billionaires lose billions: What’s happening with Elon Musk and Sam Bankman-Fried?

By akohad Nov12,2022

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In a matter of weeks, two major players in the tech industry have seen their net worth drop by billions of dollars — partly the result of their own business decisions.

Sam Bankman-Fried, the now former CEO of crypto exchange FTX, reportedly had a net worth of roughly $24 billion in March and $16 billion as recently as Nov. 7, but no longer even qualifies for a listing on the Bloomberg Billionaires Index. Some reports suggest that with his stakes in crypto and stock trading platform Robinhood, FTX companies, and Alameda Research, SBF could be facing serious financial difficulties in the days to come.

Many of the ripple effects from liquidity issues at FTX spread throughout the crypto space within a week. Bankman-Fried said on Nov. 7 that “assets are fine” at FTX in a now-deleted tweet, dismissing many of the reports on the firm’s liquidity as “false rumors.” He subsequently announced that FTX was working on a potential arrangement with Binance to address the “liquidity crunch,” but the deal fell apart within 48 hours. SBF resigned and announced FTX was filing for bankruptcy in the U.S. less than two days later.

“FTX now joins the infamous club of centralized crypto entities that went bust this cycle because they took enormous liberties not only with its customers’ funds but also with ethics, integrity, and the very ideals of crypto,” Anto Paroian, CEO and executive director of crypto hedge fund ARK36, told Cointelegraph. “Hopefully, both the industry as a whole and individual crypto users will be able to learn and grow from this experience.”

In contrast, Tesla CEO and still the world’s richest person Elon Musk had been teasing an acquisition of social media platform Twitter for months, leading many to speculate the billionaire had no intention of following through. When an agreement was reached in October, Musk purchased the company for $44 billion, with estimates suggesting that he may owe roughly $1 billion in interest expenses annually.

Musk had a net worth of more than $300 billion in October 2021 before the acquisition of Twitter and around the same time the price of Tesla stock reached an all-time high of $407.36 in November 2021. In roughly a year, the Bloomberg Billionaires Index showed the Tesla CEO had lost more than $86 billion, dropping his reported net worth to $184 billion at the time of publication.

Related: More billionaires turning to crypto on fiat inflation fears

Twitter’s new leader has already implemented a series of controversial policies that have many in the business world questioning Musk’s acumen. He fired many top executives in his first week at the company — including many members of Twitter’s content moderation team — and the platform saw a sudden spike in tweets containing hate speech, leading to reports revenue from advertisers could be at risk.

One business decision that has the potential to put Twitter at financial risk was to move the platform onto a subscription model, charging users for “verified” blue check marks instead of solely distributing them following an application process. The system led to a number of accounts falsely representing legitimate companies and individuals getting the blue checkmark, including Nintendo of America, video game publisher Valve, and United States President Joe Biden.

“Elon Musk’s failed tenure at Twitter is a good example of how to repel authoritarian attempts,” said Max Berger, co-founder of activist group IfNotNow. “He lost critical support he needed from pillars of support (advertisers, workers, users). He tried to centralize control, but couldn’t.”