Sam Bankman-Fried was able to create a leading brand for himself and FTX almost overnight.
Both his reputation and his cryptocurrency exchange crumbled into insolvency even quicker.
The company’s marketing strategy deployed a potent mix of celebrity endorsements, sponsorships, social causes and political connections.
Sam Bankman-Fried (SBF), the ex-CEO and founder, spent hundreds of millions of dollars promoting himself and his company — helping FTX become, at the time, one of the most respected cryptocurrency exchanges in the world in just 24 months.
Today, in one of the most stunning and rapid penthouse-to-jailhouse implosions in modern history, SBF is behind bars in the Bahamas while he awaits extradition to the United States. His former company, once the third-largest cryptocurrency exchange in the world, faces an $8 billion hole and over 1 million angry creditors.
The money these consumers entrusted to the exchange is gone, and with it went SBF’s golden-boy credibility.
When he said he would give most of his wealth away, FTX customers never imaged it would be their hard-earned money he was giving — and not to charity but to plug holes in his own hedge fund, Alameda Research.
Fortune once dubbed him “The Next Warren Buffett” and splashed his face across their cover. Now, the front page of the New York Post is calling him “Hairy Plotter.”
He has been removed from the website of The Giving Pledge.
It is hard to imagine a more ignoble fall from grace.
Was It All Just Smoke and Mirrors?
FTX may have been in trouble from the very beginning.
Four of SBF’s eight criminal fraud charges begin with the statement, “from at least in or about 2019, up to and including in or about November 2022.”
The exchange began its operations in May 2019.
In his Senate testimony Wednesday (Dec. 14), Shark Tank star and investor, as well as one-time FTX spokesperson Kevin O’Leary laid some of the blame for FTX’s collapse on SBF’s repurchase of FTX shares owned by rival exchange Binance, relaying to the Senate Banking Committee that SBF told him personally that the July 2021 share repurchase had “stripped the balance sheet.”
But SBF had been “stripping” his company’s balance sheet well before then with a string of high-profile partnerships meant to signal that FTX was a reliable and trustworthy company.
In May 2021, FTX announced it would become the MLB’s first-ever umpire uniform patch partner. The monetary value of the sponsorship was not released.
In June 2021, FTX purchased the naming rights to eSport organization TSM for $210 million. That same month, the crypto exchange spent $135 million to rename the home stadium of the NBA’s Miami Heat “FTX Arena.”
In July 2021, the same month SBF bought back his shares from Binance, FTX announced a crypto-industry-record $900 million fundraise.
Even that wasn’t enough for the company, as FTX would go on to raise another $820 million over the next six months.
In the fall of 2021, FTX reportedly held talks with pop star Taylor Swift over a $100 million sponsorship that never came to fruition.
A staggering amount of money, but 2021 was a good year for crypto. While venture investors turned a blind eye to FTX’s lack of an independent board, or even a chief financial officer, consumers poured more and more of their money into the exchange.
FTX also tapped major sponsorship deals with celebrities, including Tom Brady and his then-wife, supermodel Gisele Bündchen; Larry David; and Steph Curry.
The company’s aggressive approach to advertising saw the crypto exchange named as an “Ad Age top-10 marketer of the year” for 2021, as SBF rapidly became the global, trusted face of the industry.
Golden Boy to Fallen King
Then 2022 came and with it the crypto winter. Alameda Research reportedly saw massive trading losses, which FTX stepped in to cover.
The company went on an all-out marketing blitz to try to bring in more customers and more funds.
There was a Super Bowl ad, print campaigns in Vogue, The New Yorker, Vanity Fai, and other well-regarded glossies. FTX sponsored F1’s Miami Beach Race Weekend and held a spring conference in the Bahamas with Tony Blair and Bill Clinton where Orlando Bloom and Katy Perry took selfies with SBF.
The selfies have since been scrubbed from social media. The A-list stars are both distancing themselves from their involvement and being sued for it.
Last May, FTX described its “robust” security practices to the Australian government, as reported by Bloomberg.
By November, the company had entirely collapsed. John J. Ray, the appointed CEO overseeing FTX’s bankruptcy described a “complete failure of corporate controls” at the exchange and its affiliates, calling it among the worst he’s ever seen.
The bankruptcy proceedings have revealed FTX and SBF’s stories and promotions to be as hollow and empty as their one-time empire, which turned out to be nothing more than a personal piggy bank for the disgraced founder.
Even his charitable donations have turned out to be bunk.
It is difficult to think of another executive who established so much credibility so fast, and yet lost that veneer even faster.
