The crypto meltdown that happened earlier this year had caused a liquidity crisis for many companies. However, it appears that Sam Bankman-Fried was not concerned.
Executives of the FTX crypto exchange were begging the founder to preserve cash and avoid making any celebrity endorsement deals that require hundreds of millions of dollars.
But, the 30-year old crypto entrepreneur was not ready to listen to anyone, as he had used hype and branding to transform his company from an upstart into a giant, and he wanted to sign one more big name.
According to three people close to Sam Bankman-Fried and FTX, the ex-CEO of the crypto exchange had lobbied rather aggressively for signing a sponsorship deal with Taylor Swift, the 11-time Grammy Award winner.
Three years ago, the now-defunct crypto exchange would have had to pay a whopping $100 million for the deal and had come quite close to happening.
However, the people who wanted to stay anonymous due to their confidentiality agreements, said that it had fallen apart in the spring.
These former executives were familiar with the negotiations and said that the hefty price tag would have made the deal a disaster for the crypto exchange.
According to numerous business partners and company insiders, Bankman-Fried’s insistence on finalizing the deal with Taylor Swift even though the business environment was deteriorating highlighted a pattern.
It showed that the crypto billionaire had a habit of going it alone and ignoring his lieutenants.
The overconfidence of its CEO and founder was also embedded into the organization itself, as there was no board of directors that could hold Sam Bankman-Fried accountable and the leader did not have any such checks.
As far as his public image is concerned, Bankman-Fried appeared to be entirely different. He portrayed himself as a young and quirky genius, who could don a suit when appearing in front of Congress and still be comfortable in a T-shirt and shorts.
He repeatedly talked about effective altruism, a concept that involves earning a substantial amount of money in order to use it for good causes.
Earlier this year, private investors had valued FTX at $32 billion, but it declared bankruptcy last month after rumors begin flying about the company’s financials.
Customers tried to withdraw their funds and discovered that they were not available.
Even though advisors have told him not to do so, Sam Bankman-Fried continues to do what he wants and has opted to speak publicly and has given a number of interviews since the demise of his company.
Last week, he gave a video interview at the DealBook Summit of the New York Times and said that it was his duty to speak to the public and explain everything.
He also acknowledged that his lawyers had advised him against it. He said that he did not want to sit in a locked room and pretend nothing else exists.
According to the former CEO, the collapse happened due to excessive risk and sloppy management. He has denied all claims of fraud.
In fact, he claims that he was unaware of the comingling of funds between FTX and its sister company, Alameda Research, also founded by Sam Bankman-Fried.
Customer funds of about $8 billion are now missing and had been used to help Alameda.